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Suppose That a Firm Is Maximizing Profit in Its Home

Question 20

Multiple Choice

Suppose that a firm is maximizing profit in its home market at output Q1 and price P1 in the following graph:
Suppose that a firm is maximizing profit in its home market at output Q<sub>1</sub> and price P<sub>1</sub> in the following graph: If the firm now has the opportunity to sell overseas at given world price P<sub>2</sub> and the firm Can practice dumping, which one of the following will NOT happen? A) Total output of the firm will become greater than Q<sub>1</sub>. B) Home market price will rise above P<sub>1</sub>. C) The firm will increase its profits by engaging in dumping. D) The firm will maintain its home market price at P?<sub>1</sub> and will sell abroad at price P<sub>2</sub>.
If the firm now has the opportunity to sell overseas at given world price P2 and the firm Can practice "dumping," which one of the following will NOT happen?


A) Total output of the firm will become greater than Q1.
B) Home market price will rise above P1.
C) The firm will increase its profits by engaging in "dumping."
D) The firm will maintain its home market price at P?1 and will sell abroad at price P2.

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