Final answer:
Dumping occurs when foreign firms sell goods at prices below the cost of production for a short period of time in order to eliminate domestic competition and raise prices later. This strategy is known as predatory pricing. Option (B) is correct,
Step-by-step explanation:
Dumping occurs when foreign firms sell goods at prices below the cost of production for a short period of time. The more sinister explanation for why a country may engage in dumping is to price below international competitors in order to drive them out of business. This strategy is known as predatory pricing, where foreign firms initially take a loss to eliminate domestic competition and then raise prices once they have a monopoly in the market.
Dumping is a term used in the context of international trade. It's when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter's domestic market.
Dumping enables consumers in the importing country to obtain access to goods at an affordable price. However, it can also destroy the local market of the importing country, which can result in layoffs and the closure of businesses. The WTO and EU regulate dumping by putting tariffs and taxes on trading partners.