55. Which ethical issue is ‘predatory pricing'?
Answer: C
Predatory pricing is an ethical issue related to anti-competitive behavior.
Predatory pricing occurs when a company sets prices extremely low with the intent to eliminate competition, ultimately leading to higher prices for consumers once competitors have been driven out of the market.
A) Price discrimination
Price discrimination involves charging different prices to different consumers for the same good or service, which can be ethically questionable but does not directly relate to the practice of predatory pricing. Predatory pricing is focused on eliminating competition rather than differentiating prices among consumers.
B) Price fixing
Price fixing refers to an agreement among competitors to set prices at a certain level, which is a form of collusion. While both price fixing and predatory pricing can harm competition, the key aspect of predatory pricing is the intent to undercut competitors' prices rather than colluding to maintain prices.
C) Predatory pricing
Predatory pricing is characterized by a strategy where a firm sets prices below cost to drive competitors out of the market. This unethical practice is intended to establish monopoly power, making it a clear example of an ethical issue in business practices.
D) Bait-and-switch
Bait-and-switch is a deceptive marketing tactic where a retailer advertises a product at a low price but then pressures consumers to buy a more expensive item. While unethical, it does not encompass the competitive market dynamics that predatory pricing addresses.
Conclusion
Predatory pricing is definitively the ethical issue in question as it explicitly involves anti-competitive practices aimed at harming rivals and manipulating market conditions. Other options, such as price discrimination and bait-and-switch, involve different ethical concerns that do not directly align with the competitive implications of predatory pricing. Therefore, option C stands out as the correct answer due to its focus on the intent to eliminate competition through unethical pricing strategies.