The Most Efficient Way to Encourage the Growth of an Infant-Industry

question 91

Multiple Choice

The most efficient way to encourage the growth of an infant-industry is through

• A)a voluntary export restraint.
• B)a tariff.
• C)a subsidy.
• D)an import quota.
• E)none of the above

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Definitions:

Increasing-Cost Industry

An industry in which production costs increase as the industry's output expands.

Constant-Cost Industry

An industry where the cost of production does not change as the industry's output changes.

Increasing-Cost Industry

An industry in which costs per unit of output increase as the scale of output is increased due to factors such as shortages of resources or higher input costs.

Long-Run Equilibrium

A state in economics where all factors of production and outputs are variable, allowing for the adjustment to changes in demand, supply, and prices, resulting in a situation where firms earn normal profit.