Why is a predatory pricing an unprofitable strategy for a company to use over the long term?

A. It encourages more firms to enter the market

B. It leads to government deregulation of the market

C. It leads to ever-higher prices for goods

D. It causes the company to lose money

The correct answer here is D.

Predatory pricing is a move to set the prices of the goods that you are producing really low in the hopes of running the competition out of business. In the long term this is not an effective strategy as the company that is doing this loses money by putting the products out with lower prices. This tactic will only be effective if the company can, by gradually increasing the price over long period of time, return the money it lost. Predatory pricing is however illegal as it can make a monopoly.