What Is Most Likely to Happen When Firms in an Import-Competing

question 8

Multiple Choice

What is most likely to happen when firms in an import-competing infant industry are offered subsidies?

• A)The firms will suffer from diseconomies of scale.
• B)The firms will be able to sustain only if they charge a higher price than the foreign firms.
• C)The firms will be able to charge a price equal to the world price and still earn a profit.
• D)The firms will face a perfectly inelastic demand curve.

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Definitions:

Buyers

Individuals or organizations that purchase goods or services for personal use, resale, or production.

Deductibles

The amount an insured person is required to pay out-of-pocket before an insurance company will cover the remaining costs.

Moral Hazard

The situation where one party is likely to take risks because the negative consequences of the risk will be borne by another party.

Fire Insurance

A type of property insurance that covers damage and losses caused by fire, providing financial protection to property owners.