A Gucci bag sells for $120 in Italy and $240 in Canada. This is an example of a problem faced by firms trying to sell products abroad. This phenomenon is called a

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The situation described is an example of price escalation, where the price of a product increases as it moves from the manufacturing location to a foreign market due to various factors such as transportation costs, taxes, and tariffs. This poses a problem for firms trying to sell products abroad as they need to determine an optimal price that takes into account all these additional costs while remaining competitive in the foreign market.

A Gucci Bag Sells for $120 in Italy and $240