If the Infant Industry Argument Is Used to Justify Protecting

question 20

Multiple Choice

If the infant industry argument is used to justify protecting an industry that has already matured, then

• A) consumers will lose because the price they will pay is less than the world price.
• B) consumers will lose because the price they will pay is greater than the world price.
• C) stockholders lose because firms in infant industries cannot compete with firms in other industries.
• D) no one loses.

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Definitions:

Investment

The allocation of resources, such as capital, time, and effort, in something to earn a return or achieve a goal.

Present Value

The present worth of a future amount of money or series of cash flows when discounted at a certain rate of return.

Salvage Received

Salvage received refers to the amount gained or recovered from the sale or disposal of an asset after it is no longer useful or at the end of its useful life.

Simple Rate

A basic or straightforward interest rate that is applied to an amount without compounding over a time period.