Predatory pricing can be avoided by requiring that firms not ...

[rmenurse]

Predatory pricing can be avoided by requiring that firms not price below average variable cost.
 
  Indicate whether the statement is true or false

Question 2

In the last 40 years, merger policy has become a major way for antitrust authorities to regulate market structure.
 
  Indicate whether the statement is true or false

[lauravaras]

Answer to Question 1

F Preventing predatory pricing is not so easy. Firms have excuses for lower prices, such as learning by doing, or selling now to win future (repeat) business, and defining average variable cost is not always easy either.

Answer to Question 2

T Issuance by the Department of Justice of merger guidelines in 1968, followed by passage of the Hart-Scott-Rodino Act of 1976 that required firms to notify the government before large mergers, allowed antitrust authorities to evaluate mergers before they occurred, and avoid mergers that would raise serious market structure questions.