In injury analysis, what is the difference between volume effect and price effect?

• A. Volume effect concerns changes in import quantity; price effect focuses on price levels, margins, and price suppression.
• B. Volume effect focuses on price levels, margins, and price suppression.
• C. Volume effect concerns changes in domestic production capacity.
• D. Volume effect concerns tariff levels.

Answer: (A)

The difference in injury analysis is about what drives harm to the domestic industry: quantity of imports or the price environment. The volume effect looks at changes in import quantity—how the amount of imports rises or falls and how that shift affects market share, displacement of domestic production, and overall industry performance. The price effect, on the other hand, focuses on price levels, margins, and price suppression—how the prices of imported goods influence domestic prices and the ability of domestic producers to maintain profit margins.

So the best way to describe the volume effect is that it concerns changes in import quantity, while the price effect concerns price levels, margins, and price suppression. This distinction helps analysts determine whether injury stems from more imports entering the market or from the competitive pressure of import prices on domestic pricing.