An Assumption Behind the Infant- Industry Argument for Tariff Protection

question 23

Multiple Choice

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

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

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Taxable Income

Taxable income is the portion of an individual's or company's income used as the basis to calculate the taxes owed to the government.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, indicating the portion of income that is paid in taxes.

Marginal Tax Rate

The tax rate that applies to the last dollar of the taxpayer's income, indicating the percentage of tax paid on any additional income earned.