When firms set prices similar to those of competitors, they are following a strategy of:

• A. price matching
• B. price discrimination
• C. cost-plus pricing
• D. predatory pricing

Answer: (A)

Verified step by step guidance

1. Understand the concept of pricing strategies firms use in microeconomics to compete in the market.
2. Recognize that 'price matching' is a strategy where a firm sets its prices to be similar or equal to those of its competitors to remain competitive.
3. Recall that 'price discrimination' involves charging different prices to different consumers based on willingness to pay, which is different from matching competitors' prices.
4. Know that 'cost-plus pricing' means setting prices by adding a fixed markup to the cost of production, not necessarily considering competitors' prices.
5. Identify that 'predatory pricing' involves setting prices very low to drive competitors out of the market, which is distinct from simply matching prices.