What type of duty is specifically aimed at preventing dumping?

Prepare for the Western Governors University ECON2000 D089 Principles of Economics Exam. Study with multiple-choice questions and detailed explanations. Enhance your understanding and boost your scores!

The type of duty specifically aimed at preventing dumping is a countervailing duty. Dumping occurs when a company exports a product at a price lower than the price it normally charges in its home market, which can harm domestic industries in the importing country.

Countervailing duties are imposed by a government to offset the unfair advantage that foreign producers may gain due to subsidies provided by their home governments. By levying these duties, the importing country seeks to ensure that imported goods are priced fairly, allowing domestic producers to compete on a more level playing field. This mechanism is essential in protecting local industries from potentially predatory pricing practices that can distort market competition.

The other options serve different roles in trade policy, such as tariffs to protect domestic industries or quotas to limit the quantity of foreign goods. However, the specific focus of countervailing duties on addressing the issue of dumping makes it the correct choice in this case.

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