When a Firms "Dumps" Some of Its Products in Another

question 196

Multiple Choice

When a firms "dumps" some of its products in another country, it

• A) creates an environmental hazard in the receiving country.
• B) sells its goods abroad at a price lower than it costs to produce the goods.
• C) increases the total level of employment in the receiving country.
• D) is specializing according to comparative advantage.

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Definitions:

Average Accounting Return

The average annual net income of an investment divided by the average book value of the investment.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new plant, worthwhile, including the cost of debt and equity financing.

Required Return

The minimum expected rate of return on an investment deemed acceptable to an investor, taking into account the risk level of the investment.

Payback Period

The length of time it takes for an investment to generate an amount of cash flow equal to the initial amount invested.