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Which of the following terms best describes the scenario where The Very Big Canada Company (VBCC) sells its products at different prices in Canada and the US while taking advantage of currency exchange rates and price differences?

A) Countertrade

B) Parallel import

C) Dumping

D) Grey market

1 Answer

4 votes

Final answer:

The term that describes The Very Big Canada Company selling products at different prices in Canada and the US is Dumping, which is when a company sells a product abroad at a lower price than in its home market.

Step-by-step explanation:

The term that best describes the scenario where The Very Big Canada Company (VBCC) sells its products at different prices in Canada and the United States, taking advantage of currency exchange rates and price differences, is C) Dumping. Dumping occurs when a company exports a product at a price lower than the price it normally charges in its own home market. This can be a form of predatory pricing where foreign firms sell goods below the cost of production to drive out domestic competition, and upon success, raise prices.

An example of this would be if a car is sold for $20,000 in the U.S. but is significantly cheaper in Canada due to currency exchange rates; U.S. consumers might engage in arbitrage by buying the car in Canada at a lower price.

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