Question

The USA has accused a China for charging a lower price for their products in the United States than actual costs to produce. If proven to be true, the Chinese have engaged in: 

• A A LOW LABOR COST STRATEGY 

• B INDUSTRY PROTECTIONISM 

• C EXCHANGE RATE MANIPULATION 

• D DUMPING 

Answer 1

Dumping is an strategy applied by a country to sell its excess production in another country sometimes to clear its excess stocks or sometimes for capturing the market share on foreign countries. It uses the pricing sometimes lower than cost to produce and even harm the foreign countries domestic businesses. Dumping involves selling the product lower than price which it sells in it's home country.

To prevent the dumping the country charge anti dumping duty on the imported products to make its cost equivalent to the level of seller selling the same product in its own market.

On the other hand low labor cost strategy is a geniune way to reduce the cost per units of its products and it is within the norms and are ligitimate no country can oppose this strategy, further industry protectionism is used to charge duty on imported products to protect the domestic industry and making favorable policy to industries to protect it from competition.

Further exchange rate manipulation has no effect on lowering the costs of the products or selling them below the cost of sales price.

Thus dumping is the correct Option to charge lower price for its products in other market than of its own even lower than its costs of production to gain undue advantage.

Thus the correct Option is----------D i.e Dumping.