CAIE A-Level Economics 7.8.4 Pricing Policies

CAIE A-Level Economics 7.8.4 Pricing Policies
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise distinguishing limit pricing, predatory pricing and price leadership from the firm's purpose, time horizon and market structure and explaining their competitive effects.

How this is tested

  • identify limit pricing as a sustainable low price chosen to deter potential entry
  • identify predatory pricing as below-cost pressure intended to remove existing rivals
  • identify price leadership when a dominant oligopolist sets a price followed by competitors

Question 2

[Maximum number: 1]

A firm has set a low price in the short run to act as a barrier to entry for new firms entering the market.

This is an example of which pricing strategy?

A

limit pricing

B

predatory pricing

C

price discrimination

D

price leadership