Which term is used for the period of competition in which each competitor tries to cut retail prices below the others ?
Correct answer: C. Price war
- A. Price competition
- B. Price support
- C. Price war
- D. Price battle
Explanation
A price war occurs when competing firms repeatedly reduce prices to undercut one another and attract customers. Price support means maintaining a minimum price, which is the opposite policy.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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