Free Practice Questions for the WGU Courses and Certificates Global-Economics-for-Managers Exam (2026 Updated)

In Global Economics for Managers, mercantilism is widely criticized for two major weaknesses: it leads to inefficient allocation of resources and reduces national wealth in the long run, making options A and B correct.

Mercantilism views global trade as a zero-sum game, where one country’s gain comes at another’s expense. As a result, it emphasizes export promotion, import restrictions, and accumulation of precious metals. These policies distort market signals and push resources toward protected industries rather than their most productive uses, leading to inefficiency.

Over time, these inefficiencies reduce overall economic growth and national wealth. Protectionist measures raise prices for consumers, reduce competition, and discourage innovation. Retaliation by trading partners can further harm exports and global welfare.

Options C, D, and E describe modern trade theories, not mercantilism. Mercantilism rejects comparative advantage and free trade.

Therefore, A and B correctly identify weaknesses of mercantilism.

Net exports equal exports minus imports. Option C is correct because buying a car from a different country is an import transaction, and imports are included in the net exports calculation as a subtraction. This transaction affects GDP because spending on foreign-produced goods must be removed from domestic production measures. Option A is generally consumption if the food is domestically purchased. Option B is government spending because a member of Congress is paid by the government. Option D is investment because new residential construction is counted as investment in GDP accounting. Net exports help managers understand the role of international trade in national output, currency demand, and market exposure. A country importing more than it exports has negative net exports.

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In Global Economics for Managers , banks that borrow directly from the Federal Reserve through the discount window pay the discount rate , making option D correct. The discount rate is the interest rate the Fed charges banks for short-term loans.

Option A is incorrect because Fed lending fluctuates based on economic conditions. Option B is incorrect because the discount rate can be changed at any time. Option C is incorrect because consumer interest rates are market-determined, not set at the discount rate.

Thus, option D accurately describes Fed lending.

In Global Economics for Managers , oligopolies are defined by a small number of sellers , interdependence , and strategic interaction , making options A, B, and C correct.

Option C is foundational: oligopolies consist of only a few dominant firms , unlike perfect or monopolistic competition. Because of this concentration, firms cannot ignore competitors’ actions.

Option B highlights interdependence , a defining feature of oligopolies. Firms must consider how rivals will respond to pricing, output, or strategic changes. This leads to behavior such as price leadership, tacit collusion, or strategic rivalry.

Option A follows directly from interdependence. When one firm changes price or output, it can significantly affect market conditions and the profits of competing firms.

Options D and E incorrectly describe competitive markets, where firms are price takers. Option F is incorrect because oligopolies often have strong incentives to cooperate, either explicitly or tacitly, to maintain profitability.

Thus, A, B, and C accurately capture the essential characteristics of an oligopoly.

In Global Economics for Managers , John Dunning’s OLI framework explains why firms engage in foreign direct investment (FDI). One of its three components is internalization advantages , making option C correct.

Internalization advantages arise when a firm finds it more efficient to conduct business activities internally rather than through market transactions such as licensing or outsourcing. By internalizing operations, firms can reduce transaction costs, protect proprietary knowledge, maintain quality control, and avoid contractual disputes.

The OLI framework consists of:

Ownership advantages : firm-specific assets such as technology or brand reputation

Location advantages : benefits of operating in a particular country

Internalization advantages : gains from keeping activities within the firm

When all three advantages are present, firms are more likely to pursue FDI rather than exporting or licensing.

Option D is not part of the OLI framework. Thus, option C is correct.

A trade surplus occurs when a country exports more goods and services than it imports during a given period. This means foreign buyers purchase more from the country than the country purchases from abroad. Option A is correct because it accurately describes a positive balance of trade. A trade deficit is the opposite condition, where imports exceed exports. Mercantilism is an older trade theory that emphasized accumulating wealth through exports and limiting imports, but it is not the term for the actual trade-balance condition. Resource mobility refers to the ability of labor, capital, or other resources to move from one use or industry to another. For managers, trade surpluses can affect currency strength, export opportunities, and international competitiveness.

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In Global Economics for Managers , a mixed economy is defined as an economic system that combines elements of both a market economy and a command economy , making option C the correct answer. In a mixed economy, resource allocation is determined partly by market forces—such as supply, demand, and prices—and partly by government intervention through regulation, taxation, public spending, and state ownership in selected sectors.

Most modern economies are mixed economies. While private firms and consumers make many economic decisions independently, governments play an active role in correcting market failures, providing public goods, redistributing income, and stabilizing the economy. Examples include regulations on labor and environmental standards, public education and healthcare systems, and social welfare programs.

Option A, fair economy, and option D, compromise economy, are not standard economic classifications. Option B, market-command economy, is not a formally recognized system in managerial economics.

Global Economics for Managers emphasizes that understanding mixed economies is critical for managers because government policies directly affect costs, pricing, competition, and strategic decisions. Thus, option C correctly identifies the system that blends market and command features.

In Global Economics for Managers , monopolies arise when barriers to entry prevent potential competitors from entering a market. Two common barriers are economies of scale and government-granted exclusive rights , making options B and E correct.

Economies of scale occur when average costs decline as output increases. In industries with very high fixed costs, a single large firm can produce at a lower cost than multiple smaller firms. This discourages entry because new firms cannot compete efficiently at small scales, leading to monopoly outcomes.

Government regulations granting exclusive production rights —such as patents, licenses, or exclusive franchises—also create monopolies by legally preventing competition. These barriers are intentional and often justified to encourage innovation or ensure service provision.

Option A does not restrict entry. Option C may limit foreign competition but does not necessarily create a monopoly. Option D does not prevent entry. Option F may increase market concentration but is not a structural entry barrier itself.

Thus, options B and E are correct.

In Global Economics for Managers , an indifference curve represents all combinations of goods that provide the same level of satisfaction (utility) to a consumer. If Point A and Point B lie on the same indifference curve, the consumer is indifferent between the two bundles, making option B correct.

This means the consumer derives equal satisfaction from either bundle and has no preference for one over the other. Movement along an indifference curve reflects trade-offs between goods while maintaining constant utility.

Options A and D relate to cost, which is irrelevant to indifference curves. Option C is incorrect because preference differences occur only when points lie on different indifference curves.

Thus, option B correctly describes the implication of two points on the same indifference curve.

In Global Economics for Managers , monopolistic competition is characterized by many sellers , product differentiation , and free entry and exit , making options A, B, and C correct.

Firms sell products that are similar but not identical, allowing them some degree of pricing power. Examples include restaurants, clothing brands, and personal services. Because entry is relatively easy, economic profits tend to be eliminated in the long run.

Options D and E describe monopoly or perfect competition, not monopolistic competition.

Thus, A, B, and C correctly describe monopolistic competition.

In Global Economics for Managers , monopolies arise when barriers to entry prevent competitors from entering a market. Two common barriers are control of a key resource and economies of scale , making options A and B correct.

When a single firm owns a unique or scarce resource, competitors cannot produce the good without access to that resource. Economies of scale create monopolies when one firm can produce at a lower average cost than multiple firms due to high fixed costs.

Options C, D, and E promote competition rather than monopoly.

Thus, options A and B correctly identify monopoly-creating barriers to entry.

According to Global Economics for Managers , forward transactions are one of the three primary types of foreign exchange transactions, making option B the correct answer. The three main types are spot transactions, forward transactions, and swap transactions , which form the foundation of foreign exchange market activity.

A forward transaction is a contract in which two parties agree to exchange a specified amount of currency at a predetermined exchange rate on a future date. These contracts are widely used by firms to hedge against exchange rate risk , allowing managers to lock in costs or revenues and reduce uncertainty in international transactions.

Option A, hedges, describes the purpose of some foreign exchange transactions rather than a transaction type itself. Option C, balanced transactions, is not a recognized category in foreign exchange markets. Option D, straddles, refers to an options-based financial strategy, not a primary foreign exchange transaction.

Global Economics for Managers stresses that understanding forward transactions is essential for international business decision making. Exchange rate volatility can significantly affect profitability, and forward contracts provide firms with a practical tool to manage this risk.

For managers engaged in global trade and investment, forward transactions support planning, budgeting, and pricing decisions by reducing exposure to unpredictable currency movements. Therefore, option B accurately identifies one of the primary foreign exchange transaction types.

In Global Economics for Managers , a market-seeking company is one that invests in or enters a foreign location primarily to serve local or regional customers , making option C the correct answer. Market-seeking behavior is driven by demand-side considerations rather than cost or resource availability.

Option C describes a firm searching for a location where there is high consumer interest in camping supplies , which directly reflects a desire to access and serve a specific market. Such firms are motivated by factors like market size, growth potential, consumer preferences, and proximity to customers. Market-seeking firms often establish foreign subsidiaries, sales offices, or production facilities to adapt products to local tastes and respond quickly to demand.

Option A describes a resource-seeking firm, focused on obtaining low-cost or specialized inputs. Option B also reflects resource-seeking behavior, specifically in extractive industries. Option D describes a cost-seeking (efficiency-seeking) firm that locates production in regions with low labor costs.

Global Economics for Managers classifies foreign direct investment motives into market-seeking, resource-seeking, efficiency-seeking, and strategic asset-seeking. Market-seeking investment is particularly common in consumer goods and service industries, where understanding local preferences is critical for success.

For managers, recognizing market-seeking motives helps guide decisions about location, marketing strategy, and product adaptation. Thus, option C accurately illustrates a market-seeking company.

In Global Economics for Managers , the dodger strategy is appropriate when industry pressure to globalize is low and a firm’s competitive assets are customized to its home market , making option D correct.

Under this strategy, firms avoid direct confrontation with multinational enterprises by focusing on niche markets, specialized products, or protected domestic segments. Since globalization pressure is weak, firms are not forced to expand internationally, and their localized assets give them an advantage at home.

Dodgers may also cooperate selectively with MNEs or operate in areas where global competition is limited. This strategy minimizes risk and preserves firm-specific advantages without costly global expansion.

Options A and B align with extender strategies. Option C aligns with contender strategies.

Thus, option D correctly identifies when the dodger strategy is appropriate.

In Global Economics for Managers , a core proposition of the institution-based view is that firms make rational decisions within institutional constraints , making option C correct.

When a country raises its minimum wage, labor costs increase due to a formal institutional change. A multinational firm responding by relocating production to a lower-cost country demonstrates rational behavior shaped by institutional rules.

Options A, B, and D reflect competitive strategy but do not directly involve institutional constraints.

Therefore, option C correctly illustrates the institution-based view.

Forward transactions are foreign exchange contracts in which two parties agree today to exchange currencies at a specified rate on a future date. Option A is correct because the transaction terms are set now, but delivery occurs later. Managers use forward transactions to reduce exchange-rate uncertainty when they expect to receive or pay foreign currency in the future. Option B describes a spot transaction, where currencies are exchanged immediately or within a very short settlement period. Option C describes a swap transaction, which combines an exchange now with a reverse exchange later. Option D is incorrect because forward transactions do not allow trading at a past exchange rate. They lock in a future exchange rate based on current agreement.

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A parent paying for a child’s college education is counted in the consumption component of GDP. Option C is correct because consumption includes household spending on goods and services, including education services purchased by individuals or families. GDP is commonly divided into consumption, investment, government purchases, and net exports. Investment refers to business capital spending, inventory changes, and residential construction, not ordinary household education payments. Government purchases would apply if the government directly purchased goods or services, not when a private parent pays tuition. Net exports involve exports minus imports and are unrelated to a domestic household education payment. For managers, understanding GDP components matters because consumption is usually the largest part of GDP and reflects household demand conditions.

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In Global Economics for Managers , resource mobility refers to the assumption that a resource removed from one industry can be moved to another , making option B the correct answer. Resource mobility is a core microeconomic concept that explains how factors of production—such as labor, capital, and land—can be reallocated across different uses in response to changes in economic conditions.

This concept is especially important in both domestic and international trade analysis. When trade patterns change due to globalization, technological progress, or policy shifts, some industries expand while others contract. Resource mobility determines how easily workers, machines, and capital can shift from declining industries to growing ones. High resource mobility allows an economy to adjust efficiently, minimizing long-term unemployment and production losses.

Option A describes free trade ideology , not resource mobility. Option C defines a trade surplus , which relates to a country’s balance of trade rather than factor movement. Option D reflects protectionism , a policy stance that restricts trade and is unrelated to the movement of resources between industries.

Global Economics for Managers highlights that resource mobility is often assumed in economic models to simplify analysis, but in reality, mobility can be limited. Skills may not transfer easily across industries, capital may be industry-specific, and geographic or institutional barriers can slow adjustment. These limitations explain why trade liberalization can create short-run adjustment costs even when long-run gains are positive.

For managers, understanding resource mobility is critical when making strategic decisions about investment, workforce planning, and location. Firms operating in dynamic global markets benefit when resources can be redeployed quickly in response to price signals and competitive pressures. Therefore, option B precisely captures the meaning and importance of resource mobility within microeconomic and macroeconomic principles.

In Global Economics for Managers , the consumption component of GDP includes household spending on goods and services , making option C correct.

When a person pays for a haircut, it represents a direct purchase of a service by a household. Consumption is the largest component of GDP in most economies and includes spending on nondurable goods, durable goods, and services.

Option A is classified as investment. Option B is government spending. Option D is an export, counted in net exports.

Thus, option C correctly identifies a consumption transaction.

In Global Economics for Managers , gross domestic product (GDP) is defined as the market value of all final goods and services produced within a country’s borders during a specific period , making option C correct. GDP is the most widely used indicator of a country’s economic performance and size.

GDP includes only final goods and services to avoid double counting. Intermediate goods used in production are excluded because their value is already embedded in final goods. GDP also measures production within national borders , regardless of whether the producers are domestic or foreign-owned firms.

Option A, GNI, includes income earned by citizens abroad and excludes income earned domestically by foreign firms. Option B subtracts depreciation from GDP. Option D is not a standard national income measure.

Managers use GDP to evaluate market potential, economic growth, and country risk. Therefore, option C correctly identifies GDP.

In Global Economics for Managers , demand is said to be elastic when the quantity demanded responds substantially to changes in price , making option A correct. Elastic demand occurs when consumers are highly sensitive to price changes, often because close substitutes are available or the good represents a significant portion of income.

When demand is elastic, a small percentage change in price leads to a larger percentage change in quantity demanded. This relationship has important implications for pricing and revenue decisions. In such cases, price and total revenue move in opposite directions —a price decrease increases total revenue, while a price increase reduces total revenue.

Option B is incorrect because total revenue does not increase with price changes in both directions. Option C is false because price and total revenue move in opposite directions under elastic demand. Option D describes inelastic demand , where quantity responds only slightly to price changes.

Managers must understand elasticity when setting prices, forecasting revenue, and designing marketing strategies. Therefore, option A accurately defines elastic demand.

Small-scale entry allows a firm to enter a foreign market cautiously, gain experience, and learn about local demand, institutions, competitors, distribution channels, and regulatory conditions without committing excessive capital. Option C is correct because learning by doing while limiting downside risk is the central advantage of small-scale entry. This approach is useful when market uncertainty is high or when managers lack reliable local knowledge. Option A is more consistent with large-scale entry, which signals major strategic commitment. Option B is incorrect because small-scale entry does not necessarily provide full control, especially if the firm uses partnerships, exporting, or limited investment. Option D is too optimistic because small-scale entry may limit speed and market-share growth. Its main benefit is controlled learning.

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In Global Economics for Managers , substitute goods have a positive cross-price elasticity of demand , making option C correct. Cross-price elasticity measures how the quantity demanded of one good responds to a change in the price of another good.

For substitutes, an increase in the price of one good leads consumers to switch to the alternative, increasing demand for the substitute. This positive relationship results in a positive cross-price elasticity. Examples include tea and coffee or butter and margarine.

Complements have negative cross-price elasticity, normal goods relate to income elasticity, and “shortage goods” is not an elasticity classification.

Thus, option C is correct.

In Global Economics for Managers , the institution-based view of global business focuses on the relationship between firms and institutions , making option D the correct answer. This perspective argues that firm strategies and performance are shaped not only by industry conditions and firm resources but also by the institutional environment in which firms operate.

Institutions include both formal rules (laws, regulations, property rights) and informal constraints (norms, cultures, and ethical standards). Firms must align their strategies with these institutions to gain legitimacy, reduce uncertainty, and operate effectively. Governments are important institutional actors, but the institution-based view extends beyond governments to include social norms and cultural expectations.

Options A and B overlook the strategic role of institutions. Option C is too narrow, as it limits the relationship to firms and governments rather than the full institutional framework.

Thus, option D accurately reflects the institution-based view emphasized in global managerial economics.

In Global Economics for Managers , opportunity cost is defined as the lost potential from pursuing one activity at the expense of another, given the available alternatives , making option B correct. Opportunity cost reflects the value of the next best alternative that is foregone when a decision is made.

This concept is central to economic decision making because resources—such as time, capital, and labor—are scarce. Choosing one option necessarily means giving up another. Opportunity cost includes both monetary and non-monetary factors and applies to individuals, firms, and governments alike.

For firms, opportunity cost may involve using capital for one investment rather than another. For consumers, it may involve spending money on one good instead of saving it or purchasing a different good. Managers must account for opportunity costs to make efficient and rational decisions.

Option A refers only to explicit costs, which are incomplete. Options C and D describe different cost and benefit concepts.

Thus, option B correctly defines opportunity cost.

The most basic way for a nonfinancial company to reduce exposure to foreign exchange fluctuations is to invoice customers in the company’s own currency. Option A is correct because this shifts exchange-rate risk away from the seller and onto the buyer. If the firm receives payment in its home currency, its revenues are more predictable and are not directly reduced by unfavorable currency movements. Currency hedging, rate locks, and forward transactions are more formal financial or contractual tools for managing exchange risk, but they require additional planning, market access, and sometimes financial expertise. Invoicing in the home currency is operationally simpler. However, managers must remember that this approach may make the firm less attractive to foreign buyers who prefer pricing in their local currency.

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In Global Economics for Managers , a resource-based monopoly arises when a single firm controls a unique, scarce resource that cannot be easily replicated or accessed by competitors. Option D correctly illustrates this situation. When only one mine in the world possesses a rare jewel, the firm owning that mine has exclusive control over the supply of that resource, creating monopoly power.

This type of monopoly differs from legal or technological monopolies. The monopoly exists not because of government protection or intellectual property rights, but because of natural scarcity . Competitors cannot enter the market without access to the same resource, and alternative sources may be unavailable or prohibitively costly. As a result, the monopolist can restrict output and charge prices above marginal cost.

Option A describes a natural monopoly based on cost structure rather than resource ownership. Options B and C describe legal monopolies created by copyright protection, not resource monopolies.

Thus, option D correctly demonstrates a monopoly created by control over a unique resource.

In Global Economics for Managers , the Federal Reserve lowers the federal funds rate by purchasing government bonds , making option C correct.

Bond purchases increase bank reserves, easing liquidity conditions in the interbank market. With more reserves available, banks lend to each other at lower interest rates, reducing the federal funds rate.

Options A and B raise interest rates, while option D is fiscal policy.

Therefore, option C is correct.

In Global Economics for Managers , tariffs are shown to redistribute economic surplus , making option C correct. When a tariff is imposed, consumers lose surplus due to higher prices, while domestic producers gain surplus and the government collects tariff revenue.

However, the gains to producers and government do not fully offset consumer losses, resulting in deadweight loss. Thus, tariffs reduce total economic welfare even though certain groups benefit.

Options A, B, and D are incorrect.

Therefore, option C accurately summarizes the overall economic effect of tariffs.

In Global Economics for Managers , consumer surplus is defined as the difference between what a consumer is willing to pay for a good and what the consumer actually pays , making option A correct.

In this example, the shopper was willing to pay $25 but paid only $17. The consumer surplus is therefore:

Consumer Surplus = Willingness to Pay − Price Paid

Consumer Surplus = $25 − $17 = $8

This $8 represents the net benefit the consumer gains from the transaction. Consumer surplus captures the idea that consumers often value goods more than the market price, and the difference contributes to their economic welfare.

Options B and C incorrectly refer to producer surplus, which depends on production costs rather than consumer willingness to pay. Option D incorrectly states that consumer surplus equals $25, which is the maximum willingness to pay, not the surplus.

Global Economics for Managers uses consumer surplus extensively to evaluate the effects of price changes, taxes, and trade policies on consumer welfare. Thus, option A is correct.

In Global Economics for Managers , copyright is identified as a form of intellectual property protection that applies to original works of authorship , making option A—the content of a book—the correct answer. Copyright protects the expression of ideas rather than the ideas themselves.

Copyright protection typically covers literary works, music, films, software code, artistic creations, and other original content fixed in a tangible medium. It grants the creator exclusive rights to reproduce, distribute, display, and perform the work for a specified period. This protection encourages creativity and innovation by allowing creators to earn economic returns from their work.

Option B refers to trademarks , which protect brand names, symbols, and slogans used to distinguish goods or services. Option C, the design of a logo, is also generally protected under trademark law. Option D describes a patent , which protects new inventions, processes, or designs with functional utility.

Global Economics for Managers emphasizes that strong intellectual property protection is critical for firms competing in knowledge-intensive industries. Copyright protection, in particular, plays a key role in publishing, entertainment, and software sectors.

Therefore, option A correctly identifies an example of what copyright is used to protect.

Variable costs change as output changes. Option A is correct because a tax charged on variable inputs increases as the firm uses more inputs to produce more output. Option E is also correct because the cost of parts used in individual devices rises directly with the number of devices produced. If the manufacturer produces more computers, it must buy more parts; if production falls, parts costs fall. The other choices are fixed costs because they generally do not vary directly with the quantity produced in the short run. A license fee, CEO salary, rent, and monthly internet service are normally paid regardless of whether output is high or low. Managers must separate fixed and variable costs to make production, pricing, shutdown, and break-even decisions.

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Cross-price elasticity of demand measures how the quantity demanded of one good changes in response to a price change in another good. Option A is correct because this concept identifies whether goods are substitutes or complements. If cross-price elasticity is positive, the goods are substitutes; when the price of one rises, demand for the other increases. For example, if coffee becomes more expensive, demand for tea may rise. If cross-price elasticity is negative, the goods are complements; when the price of one rises, demand for the other falls. For example, if printers become more expensive, demand for printer cartridges may decline. Price elasticity of demand measures responsiveness to the good’s own price, not another good’s price. The other options are not standard terms.

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In Global Economics for Managers , property rights are fundamental to economic development and global competitiveness, making options C and F the correct answers.

Option F correctly defines property rights as the legal rights governing the use of an economic resource and the ability to derive income and benefits from it. These rights specify ownership, control, transferability, and enforcement, providing clarity and predictability for economic actors.

Option C is also correct because protection of property rights is widely recognized as a key driver of economic progress , especially in developing countries. Secure property rights encourage investment, innovation, and long-term planning by reducing the risk of expropriation or misuse. Firms are more willing to invest in capital-intensive production and research and development when their assets and returns are legally protected.

Option A is incorrect because secure property rights encourage—not discourage—long-term investment and capital-intensive industries. Option B is incorrect because insecure property rights undermine economies of scale and R & D by increasing uncertainty. Option D contradicts extensive evidence showing that weak property rights constrain sustainable growth. Option E is partially normative but not emphasized as a core analytical statement in managerial economics texts.

Thus, options C and F accurately reflect the role and definition of property rights in global economics.

In Global Economics for Managers , an increase in the money supply leads to a rightward shift of the aggregate demand (AD) curve , making option B correct.

An expanded money supply lowers interest rates, encouraging borrowing and spending by households and firms. Consumption and investment rise, increasing total demand for goods and services at every price level.

Options C and D involve supply-side changes, not monetary policy effects.

Thus, option B correctly describes the macroeconomic impact of an increased money supply.

In Global Economics for Managers , an oligopoly is defined as a market structure characterized by limited competition in which a small number of sellers dominate the market , making option C the correct answer. These firms collectively control a large share of total market output, and each firm’s actions significantly influence the behavior and profitability of the others.

Oligopolistic markets are common in industries with high barriers to entry, such as automobiles, airlines, telecommunications, and energy. Barriers may include economies of scale, high capital requirements, technological advantages, or government regulation. Because only a few firms operate in the market, strategic decision making becomes critical.

Option A, monopoly, involves a single seller. Option B, monopolistic competition, includes many sellers offering differentiated products. Option D, perfect competition, involves many sellers with no market power.

Global Economics for Managers emphasizes that oligopolies are marked by strategic interaction, where firms must anticipate competitors’ reactions when setting prices, output, advertising, or investment levels. This interdependence distinguishes oligopoly from other market structures.

Thus, option C accurately describes a market structure with limited competition and a small number of sellers.

An antidumping duty is a tariff imposed on imported goods that are sold at unfairly low prices, often below cost or below the price charged in the exporter’s home market. Dumping can harm domestic producers because foreign firms may temporarily underprice goods to gain market share or drive competitors out of business. Governments use antidumping duties to offset this unfair pricing and restore competitive conditions. Option C is correct because it directly identifies the trade remedy used against below-cost imports. Factor endowment refers to a country’s available resources, not a tariff. Deadweight cost is the net welfare loss caused by tariffs or other distortions. Opportunity cost is the value of the next best alternative forgone when a choice is made.

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