Question

What does the term ``dumping'' refer to when it comes to the actions of a seller in global market?

• A. Exceeding the demand for products in the global market.
• B. Exceeding the supply in the domestic market.
• C. Engaging in the practice of selling a commodity at a lower price in the global market than the price charged at the domestic market.
• D. Engaging in the practice of selling a commodity at a higher price in the global market while charging a lower price in the domestic market.

Hint:

Understand dumping as unfair trade practice involving selling products abroad at very low prices.

Answer 1

The Correct Option is C

Step 1: Definition of Dumping
Dumping happens when a company sells its products in a foreign market at prices lower than in its home market or below production cost to gain market share or eliminate competition.
Step 2: Why is it a problem?
It can harm the domestic industries of the importing country because local producers cannot compete with cheap imported goods.
Step 3: Other options
- Options (A) and (B) are general supply-demand concepts.
- Option (D) is the opposite of dumping.
Thus, Option (C) correctly defines dumping.