Two Pricing Strategies That Will Often Trigger Allegations of Dumping

question 46

True/False

Two pricing strategies that will often trigger allegations of dumping is if the home-country firm sets a price in the foreign market below what it charges the domestic market or if the price is above what it domestically charges, but below the marginal cost to ship it overseas and sell it there.

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Definitions:

Actual Costs

The real costs incurred in the production of goods or providing services, as opposed to estimated or standard costs.

Standard Costs

Standard costs are predetermined costs to manufacture a single unit or a number of units of a product during a specific period under current or anticipated conditions.

Direct Materials Price Variance

The difference between the actual cost of direct materials used in production and the expected (standard) cost of those materials.

Overhead

The ongoing business expenses not directly attributable to creating a product or service, such as rent, utilities, and administrative costs.