An Assumption Behind the Infant-Industry Argument for Tariff Protection Is

question 197

Multiple Choice

An assumption behind the infant-industry argument for tariff protection is that

• A) foreign competitors are selling output below average cost.
• B) the domestic industry will be facing an upward adjustment in its average cost.
• C) the domestic industry will eventually gain a comparative advantage in producing the good.
• D) the market needs additional competition to satisfy consumer demand.

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Definitions:

Imports

Products or services imported into a country from overseas for the purpose of selling.

Price

The funds expected, demanded, or provided in exchange for a particular good or service.

CD-Rom Drives

Devices that can read information stored on CD-ROMs, which are used for the digital storage of data.

Tariffs

Levies enforced by a government on goods that are imported or exported.