Which Statement Concerning the Infant Industry Argument Is NOT Correct

question 131

Multiple Choice

Which statement concerning the infant industry argument is NOT correct?

• A) The management and workers in an infant industry may be too inexperienced to compete in world markets.
• B) Infant industry protection tends to focus on labor-intensive industries.
• C) Infant industry protection is difficult to remove after the industry has matured.
• D) An infant industry is too underdeveloped to achieve comparative advantage.

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Definitions:

Inelastic

A characteristic of goods or services for which demand or supply does not significantly change in response to price changes.

Long Run

A period of time in which all factors of production and costs are variable, allowing for adjustment to changing market conditions.

Short Run

A time period in which at least one input is fixed, limiting the adjustments that a firm can make to its production.

Binding Price Ceiling

A binding price ceiling is a government-imposed limit on the price charged for a product that is set below the market equilibrium price, leading to shortages.