Question

Dumping is defined as the situation in which

A. domestic producers sell a product at prices below the cost of production.
B. domestic producers are protected by tariffs.
C. foreign producers sell a product at a price below the cost of production.
D. foreign producers sell a product at a price above a fair level.
E. domestic producers cut production to drive up domestic prices.

Answer 1

C. foreign producers sell a product at a price below the cost of production.

Step-by-step explanation:

Dumping is associated with international trade. It happens when a country or a company exports huge volumes of a product at a price lower then it sells in the domestic market. In other word, consumers in foreign markets can purchase the item at a lower price than consumers in the domestic market.

Companies wishing to penetrate international markets use the dumping technique. They flood the foreign market with unfairly priced products to gain a considerable market share. Dumping is legal in international trade. Countries impose tariffs, quotas, and embargo's to restrict imports and protect local manufacturers from dumping.