Assessment of Skills and Knowledge(ASK) in Fundamental Marketing Concepts Practice Test

Which of the following is a type of regulation that discourages predatory pricing practices and encourages fair trade?

1. Anti-puffery

2. Anti-dumping

3. Anti-captive

4. Anti-skimming

The correct answer is: Anti-dumping

The correct answer is anti-dumping, which refers to regulations aimed at preventing companies from selling products at very low prices in a foreign market, significantly below their normal value, with the intent to eliminate competition. This practice can be harmful as it often leads to unfair competition and can drive local businesses out of the market, ultimately reducing consumer choices over time. Anti-dumping regulations serve to create a level playing field in international trade by ensuring that imports do not harm domestic industries through predatory pricing practices. They help maintain fair competition by discouraging companies from resorting to selling at a loss in other countries to establish market dominance, thus encouraging ethical trading practices. In contrast, other options mentioned, while relevant to marketing and trade, do not directly address the issue of predatory pricing in the same way. Anti-puffery relates to false advertising and misleading claims about a product's attributes, while anti-captive focuses on preventing suppliers from exploiting their market power. Anti-skimming describes a pricing strategy aimed at maximizing profits from different market segments and is not directly tied to regulations concerning predatory pricing or fair trade.