If a Foreign Supplier Sells a Good in Another Country

question 11

Multiple Choice

If a foreign supplier sells a good in another country at a cheaper price than it sells the good in its home market, the

• A) foreign supplier will gain a monopoly in the foreign market.
• B) consumers in the receiving country will be harmed by the dumping of the good into its domestic market.
• C) consumers in the receiving country can gain from buying the foreign-produced good if it is cheaper than the cost of producing the good domestically.
• D) usual implications of the law of comparative advantage with trade restrictions do not hold in this case, particularly if the low-cost supplier is subsidized by a foreign government.

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Definitions:

Unfair Economic Advantage

A situation where a business or country gains a superior position in the market or economy through unethical, illegal, or inequitable practices.

Accounting Fraud

Deliberate manipulation or falsification of financial records and statements to give a misleading view of a company's financial health.

Bond Ratings Agencies

Organizations that assess the creditworthiness of both sovereign and corporate issuers of debt securities, providing investors with information on the risk level of their investments.

Conflicts of Interest

Situations in which a person's private interests could potentially interfere with their professional obligations or duties, leading to biased decisions.