"One of the problems with price competition is that price decreases by one competitor are easily observed by other competitors. This can lead to rounds of successive price cuts, resulting in reduced profits for all competitors. This situation is called"
a. Loss-leader pricing
b. Product line pricing
c. Predatory pricing
d. Industry cannibalization

A price war is a situation in which competitors undercut prices to offer their products at a lower level than their rivals so they can attract more consumers. Manufacturers find ways to cut their costs so they can stay profitable under these circumstances. If they are unable to do that, the company will end up with losses.

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Parrain Parrain · Answer 2 · 2021-11-16T12:14:01+01:00

When activities in an industry lead to the players there reducing their prices successively to match their competitors, this is called e. a price war.

A prize war:

Is when competitors keep reducing their prices in order to match their competitors'
Is done to keep competitors from gaining more market share
More often than not, harms the industry due to companies making huge losses

Prize wars happen because competitors try to gain market share by reducing their prices to encourage more people to buy from them. If others did the same however, it would not bode well for the industry.

In conclusion, the scenario described is a prize war.

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