When a Foreign Firm Sells Its Exports at a Lower

question 144

Multiple Choice

When a foreign firm sells its exports at a lower price than its cost of production, the firm is

• A) imposing an economies of scale cost.
• B) dumping.
• C) avoiding a tariff.
• D) competing in an infant industry.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared and able to spend on a product or service and the actual amount they end up paying.

Perfect Price Discriminator

A theoretical entity that charges each consumer the maximum price they would be willing to pay for a good or service.

Perfectly Competitive Firm

A company that operates in a market where buyers and sellers are so numerous and well informed that all elements of monopoly are absent, and the market price of goods is beyond the control of individual buyers and sellers.

Social Loss

Social loss is the total loss to society due to factors like inefficient resource allocation or externalities, which includes both private and external costs.