Question

Dumping is the practice of a foreign company exporting products abroad at a lower price than the price in the home market, or even below the costs of production, in order to drive down the price of the domestic product. True or False?

Answer 1

Dumping is true as it involves selling products abroad at a lower price, aiming to undercut domestic competition and potentially engage in predatory pricing after driving out domestic players.

Step-by-step explanation:

The statement is true: Dumping is the practice where a foreign company exports products to another country at a price lower than the price in its home market, or even below the cost of production. This strategy can be used by foreign firms as part of a long-term plan to undercut domestic competition. By selling goods at prices below their production costs temporarily, these companies can drive out domestic competitors. Once the competition has been eliminated, they may then raise their prices. This approach is often referred to as predatory pricing, a concept explored in discussions on monopolies.