Why Would Foreign Firms Export a Product at Less Than

question 12

Multiple Choice

Why would foreign firms export a product at less than its cost of production-which
Presumably means making a loss?

• A) Many nations participate in poor planning and as a result produce a surplus of product which they sell at a loss.
• B) This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices.
• C) Many nations simply wish to keep their workers employed, no matter what the cost.
• D) Many nations simply produce and sell inferior goods at prices that reflect this fact.

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