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:

Rent Payments

Periodic payments made by a lessee to a lessor for the use of some property, facility, equipment, or service.

Cable Bill

A periodic charge for cable television services provided by a cable service provider, typically on a monthly basis.

Sole Proprietorship

A business structure in which a single individual owns and operates the business, enjoying full control but also bearing unlimited liability.

Limited Liability

A legal structure that limits the financial responsibility of company owners or shareholders to the amount they have invested, protecting personal assets.