What is the problem with protecting industries in the United States from the dumping of foreign products on the domestic market?
What will be an ideal response?
Trade protection is sought in this case because it is thought that another nation is dumping (selling) its production at below cost. When this product is sold in the United States, it undercuts the domestic market. Economists see two plausible reasons for this type of economic behavior. First, foreign firms may in fact be trying to drive out U.S. competition. Second, dumping can be a form of price discrimination.
The problem is that it is difficult to determine if a nation is dumping its product on another nation’s market at below the cost of production. This practice is prohibited under U.S. trade law, but there are few valid cases of it each year. The existence of dumping does not justify the imposition of strong trade protection. The evidence for dumping needs to be evaluated on a case-by-case basis.
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The rising phase of a business cycle measured by an increase in real GDP is called:
A) trough. B) expansion. C) recession. D) contraction.
Suppose the domestic market demand function in a certain market where Q is measured in thousands of units is Qd = 20 - 2.5P, and the domestic market supply function is Qs = 2.5P - 7.5. Suppose further that the world price for the good in question is $3.40 per unit. Under conditions of free trade, how much consumer surplus will there be?
A. $26,450 B. $26,650 C. $52,900 D. $53,300
The fact that since 1990 the number of movie screens in the United States has grown faster than the number of theaters illustrates the benefits of
a. economies of scale b. constant long-run average cost c. diseconomies of scale d. increasing long-run average cost e. a U-shaped marginal cost curve
A competitive price-taker market in long-run equilibrium is described as efficient because firms
a. produce at the low point on their average cost curve. b. produce where marginal cost yields a profit. c. earn no more than the cost of capital. d. are not profitable.