Question

The use of sharp, temporary price cuts as a form of ________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers. natural monopoly monopolistic competition predatory pricing oligopolistic competition g

Answer 1

The use of sharp, temporary price cuts as a form of predatory pricing would enable traditional US automakers to discourage new competition from smaller electric car manufacturers.

What is predatory pricing?

A method of pricing, which is generally implemented by a firm or a supplier who holds dominant position in the market to kill the market share of its competitors, is known as predatory pricing.

In this method, the prices are lowered up to loss-bearing capacities in the short-run to get access to a bigger market share, and reap benefits in the future.

The similar use-case is shown in the example above, where a dominant US automobile manufacturer uses predatory pricing to kill the competition of small manufacturers.

Hence, option C holds true and states about the predatory pricing.

Learn more about predatory pricing here:

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