Dumping occurs when, in a foreign market, a good is sold
A) below its cost of production or below the price in that market.
B) at a discount below the list price.
C) below its nominal price.
D) at a price above the equilibrium price.
A
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What we produce during our working time is ________ as part of GDP and the enjoyment we gain from our leisure time is ________ as part of GDP
A) included; not included B) included; included C) not included; included D) not included; not included
The two deadweight triangles are the Consumption distortion and Production distortion losses. It is easy to understand why the Consumption distortion constitutes a loss for society
After all it raises the prices of goods to consumers, and even causes some consumers to drop out of the market altogether. It seems paradoxical that the Production distortion is considered an equivalent burden on society. After all, in this case, profits increase, and additional production (with its associated employment) comes on line. This would seem to be an offset rather than an addition to the burden or loss borne by society. Explain why the Production distortion is indeed a loss to society, and what is wrong with the logic that leads to the apparent paradox.