Coolaire is the only firm producing a refrigerators. It costs $800 to produce a
ID: 1247283 • Letter: C
Question
Coolaire is the only firm producing a refrigerators. It costs $800 to produce a refrigerator, and coolaire sells each refrigerator for $1,200. Suppose, that a new firm, chillbox, enters the market for refrigerators and that chillbox has the same costs as coolaire. After chillbox enters the market, coolaire starts selling its refrigerators for a price of $700. What is the most likely reason for coolaire's price cut? a.) coolaire is engaged in predatory pricing b.) coolaire is engaged in resale price maintenance.Explanation / Answer
a.) coolaire is engaged in predatory pricing b.) So he can get rid of the competition.