Question

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss? Many nations participate in poor planning and as a result produce a surplus of product which they sell at a loss. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic U.S. competition, they would then raise prices. Many nations simply wish to keep their workers employed, no matter what the cost. Many nations simply produce and sell inferior goods at prices that reflect this fact.

Answer 1

The statement" The foreign firms sell at below the production cost and whenever it is driven out so it increases the prices" is correct.

In the case when the foreign firms export a product i.e. lower than the cost of production that means they make the losses is when:

• There is a long-term strategy.
• It should be less than the cost of production in less period.
• The prices are increased at the time when the driven out the competition of the domestic united states.

In other cases, it does not make the losses only the above factors should be considered.

Therefore we can conclude that the statement "It is part of the long-term strategy where the foreign firm should sell less than the cost of production in the short period of time and whenever it has driven out the competition of the domestic united states so the prices should be increased" is correct.

Learn more about the cost of production here: brainly.com/question/15235684