Setting a low price forcing rivals out of business.

Setting a low price forcing rivals out of business.

• A. Predatory pricing
• B. Penetration pricing
• C. Product life cycle
• D. Pricing strategy

Answer: (A)

Predatory pricing is about setting deliberately low prices to force rivals out of the market. By slashing prices (often below cost), a firm makes competition unsustainable for others, pushing them to exit. Once rivals are eliminated, the dominant firm can raise prices again to recover losses and boost profits. This differs from penetration pricing, which uses low prices mainly to win customers and gain market share, not to eliminate competitors. The product life cycle describes the stages a product goes through, not a pricing tactic to crush competition. Pricing strategy is a broad term for how prices are set, which can include many approaches but doesn’t by itself imply pushing rivals out.

Predatory pricing is about setting deliberately low prices to force rivals out of the market. By slashing prices (often below cost), a firm makes competition unsustainable for others, pushing them to exit. Once rivals are eliminated, the dominant firm can raise prices again to recover losses and boost profits. This differs from penetration pricing, which uses low prices mainly to win customers and gain market share, not to eliminate competitors. The product life cycle describes the stages a product goes through, not a pricing tactic to crush competition. Pricing strategy is a broad term for how prices are set, which can include many approaches but doesn’t by itself imply pushing rivals out.