Dumping of goods abroad

Question

Quizplus · Accepted Answer

Dumping of goods abroad may be part of a firm's price discrimination strategy. This involves selling a good at a lower price in a foreign market than in the domestic market. This allows the firm to capture a larger share of the foreign market and increase its overall profits. However, this can harm domestic producers in the foreign market and lead to trade disputes. Dumping usually does not drive up prices of the dumped goods as it is intended to make them more affordable in the foreign market. Permanent tariffs, as suggested in option A, may not be the best solution as they can lead to retaliation from trading partners and harm overall economic welfare. Option C is incorrect as dumping usually does not help rectify a trade deficit as it involves exporting more than importing.

Dumping of Goods Abroad