What is meant by predatory dumping? How likely is it for this to ...

[saliriagwu]

What is meant by predatory dumping? How likely is it for this to occur in the United States? Discuss.
 
  What will be an ideal response?

Question 2

An austerity policy is
 
  A) an increase in the money supply.
  B) an expenditure reduction and expenditure switching policy.
  C) an expansionary fiscal policy accompanied by decreases in taxes, increases in expenditures, or both.
  D) an exchange rate switching policy from a fixed to a flexible exchange rate system.
  E) None of the above.

[jesse.fleming]

Answer to Question 1

Predatory dumping refers to a situation where a foreign firm charges a price that is so low it is able to capture the local market. Once obtained, the foreign firm then acts like a monopolist. Predatory dumping is extremely unlikely in the United States. When the foreign firm raises its price, nothing prevents new (possibly local) firms from entering the market. Moreover, the U.S. market is so large, it is doubtful that any foreign monopolist could satisfy U.S. demand.

Answer to Question 2

B