Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 21: Q.9 (page 522)

Explain how predatory pricing could be a motivation for dumping.

Short Answer

Expert verified

Selling products at a cheap rate is how predatory pricing could be a motivation for dumping.

Step by step solution

01

Step 1. Meaning 

Predatory pricing - predatory pricing is lowering the price of the product in the least to take maximum market share.

Dumping -Selling goods at an artificial price internationally even below the cost of production.

02

Step 2. Explanation

Here, domestic firms have to match the low prices of imported goods to be competitive, here internally imported products sell goods at lower prices (prices below the cost of production) to take maximum market share and bear the short term losses for monopoly and later rise the prices for long term profits.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Is international trade likely to have about the same effect on everyone’s wages?

Why is the national security argument not convincing?

If trade barriers hurt the average worker in an economy (due to lower wages), why does the government create trade barriers?

Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.

Why might the unsafe consumer products argument be a more effective strategy (from the perspective of the importing country) than using tariffs or quotas to restrict imports?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free