Severstal, a Russian steel company, sells sheet steel in the domestic market, wh

Question

Severstal, a Russian steel company, sells sheet steel in the domestic market, where it has a monopoly. It also exports steel to the United States, where it faces a perfectly competitive market. Suppose the following graph shows the firm's average cost (AC) and marginal cost (MC) curves. DD is the demand curve that Severstal faces in the domestic market, and MR is the corresponding marginal revenue curve. FD is the demand curve facing Severstal in the U.S. market. Examine Severstal's profits when the company sells steel only in Russia and when it exports steel to the United States. Tool tip: Mouse over the points to see their coordinates. First, suppose that Severstal sells steel only in the Russian domestic market. The company maximizes its profit if it sells_______ tons of steel at a price of_______ per ton. In this case, the company's profit is Now, suppose Severstal sells steel in both Russia and the United States and can charge different prices in the two markets. The company maximizes its profit if it sells______ tons of steel in Russia at a price of _______ per ton and_______ tons of steel in the United States at a price of________ per ton. In this case, the company's profit is__________. Summarizing the results of your analysis, which of the following statements about Severstal's exports to the United States are true? Check all that apply. Severstal is dumping because it sells steel in the U.S. market at a price that is below its average cost. Severstal increases its profits by exporting steel to the United States. Since Severstal charges the same price in the U.S. market as do U.S. companies, it is not dumping. To maximize its profits, Severstal should charge the same price in both foreign and domestic markets.

Explanation / Answer

A) option several is dumping beacuse........................!!

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