If it costs a firm $10 to produce a good and the same good sells for $7 abroad, then this firm is engaging in
A) profit maximization.
B) price discrimination.
C) price differentiation.
D) dumping.

Question

Quizplus · Accepted Answer

Dumping is the practice of selling goods in a foreign market for less than it costs to produce them, with the goal of driving competitors out of the market. In this scenario, the firm is selling its goods for $7 abroad, which is less than the cost of production ($10). Therefore, the firm is engaging in dumping.

If It Costs a Firm $10 to Produce a Good