Question 55

Predatory pricing is an ethical issue.

Predatory pricing occurs when a company sets prices extremely low with the intent to eliminate competition, which can harm the market in the long run. This practice is considered unethical as it undermines fair competition and can lead to monopolistic behavior.

A) Price discrimination

Price discrimination involves charging different prices to different consumers for the same product or service, based on their willingness to pay. While it can be considered an ethical issue in certain contexts, it is not the same as predatory pricing, which specifically aims to drive competitors out of the market.

B) Price fixing

Price fixing is an agreement among competitors to set prices at a certain level, which is considered illegal and unethical. Although it is a serious ethical violation, it does not relate to predatory pricing, which focuses on aggressive low pricing strategies to eliminate competition.

C) Predatory pricing

Predatory pricing is the correct answer as it directly refers to the unethical practice of setting prices low to eliminate competitors. This strategy can create a monopoly, ultimately harming consumers and the market by reducing competition.

D) Bait-and-switch

Bait-and-switch is a deceptive marketing tactic where consumers are lured in by low prices only to find that the product is unavailable or of inferior quality. While unethical, it does not align with the concept of predatory pricing, which is focused on price competition rather than deceptive practices.

Conclusion

Predatory pricing is an ethical issue because it intentionally disrupts fair competition and can lead to monopolies, negatively impacting the market and consumers. The other options, while they represent different unethical practices, do not specifically pertain to the aggressive pricing strategy that defines predatory pricing, making C the only correct choice.