International economics: Define the practice known as dumping in foreign trade. Focus on the pricing behavior of exporters relative to cost or home-market price. Choose the most accurate definition.
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ASelling exports in a foreign market at a price lower than the home-market price or below cost to gain market share
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BExporting only surplus goods at the same price as the home market
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CSelling imports domestically at prices set by the government
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DRestricting exports through voluntary export restraints
Answer
Correct Answer: Selling exports in a foreign market at a price lower than the home-market price or below cost to gain market share
Explanation
Given data
- Term: Dumping.
- Context: International trade/antidumping law.
Concept/Approach Dumping refers to discriminatory pricing by exporters: charging a lower price abroad than the normal value (home-market price) or even below cost, often to capture or distort the foreign market.
Reasoning • Correct definition highlights selling below normal value/cost in export markets. • Other options either keep prices equal, misplace the market (imports), or describe different policies.
Common pitfalls Equating dumping with any price difference regardless of cost or intent; ignoring the comparison with home-market price/cost.
Final Answer Selling exports in a foreign market at a price lower than the home-market price or below cost to gain market share