Question

What must be demonstrated to prove that a company engaged in predatory pricing? Correct Answer(s) Drag appropriate answer(s) here The firm made agreements with other companies to form a cartel. The company stopped advertising once its competitors left the market. The company significantly raised its prices after its rivals were forced out of the market. The company deliberately set its prices below its average variable costs.

Answer 1

The correct answers are letters "C" and "D": The company significantly raised its prices after its rivals were forced out of the market; The company deliberately set its prices below its average variable costs.

Step-by-step explanation:

Predatory pricing is the set of actions a company carries out to establish the price of its goods or services below the market price -even below the firm's costs, which might be beneficial for consumers in the short term but goes against them in the long run since most companies affected tend to exit the industry, leaving the predatory company alone as a monopoly so it can change the price of the good or service offered at will.