A Firm That Faces Problems of Falling Sales and Excess

question 36

Multiple Choice

A firm that faces problems of falling sales and excess productive capacity might resort to international dumping if it:

• A) Can charge higher prices in markets that are elastic to price changes
• B) Earns revenues on foreign sales that at least cover variable costs
• C) Can sell at that price where domestic and foreign demand elasticities equate
• D) Is able to force foreign prices below marginal production costs

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Definitions:

Rule Of Reason

A test used to determine whether an anticompetitive agreement constitutes a reasonable restraint on trade. Courts consider such factors as the purpose of the agreement, its effect on competition, and whether less restrictive means could have been used.

Per Se Standard

A principle where an action or condition is considered inherently illegal or wrong, without the need for additional proof.

Economic Analysis

The systematic examination of the costs and benefits associated with economic decisions, policies, or projects.

Price-Fixing Agreements

Illegal arrangements where competing businesses agree on pricing of goods or services, undermining free market competition.