ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Price cutting erodes profit margins and, in some cases, can lead to firms making losses and at risk of leaving the market. Lower profits mean fewer resources are available to fund capital investment.

Detailed explanation-2: -A price war occurs when two or more rival companies lower the prices of their products or services with the goal of stealing customers from their competitors or gaining market share. Price wars come at a significant, albeit temporary, cost since they decrease a company’s profit margins in the short term.

Detailed explanation-3: -A price war refers to the action of two rival companies who both lower the prices on products, in an attempt to undercut one another and capture greater market share.

Detailed explanation-4: -A price war is when two competitors continuously lower the price of their products in a strategic attempt to undercut one another and capture greater market share.