Nascent Industries Require Adequate Protection from Foreign Competition Because

question 40

Multiple Choice

Nascent industries require adequate protection from foreign competition because:

• A)they experience economies of scale.
• B)they experience diseconomies of scale.
• C)the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
• D)they do not have adequate resources to undertake research and development.
• E)their initial costs of production are considerably higher than the foreign firms.

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Definitions:

Competitive Firm

A business that operates in a market where it has numerous competitors and cannot set prices but rather accepts market prices.

MC

Marginal Cost, the cost incurred from producing one additional unit of a good or service.

AVC

Average Variable Cost refers to the variable costs (such as labor and materials) per unit of output produced.

MR Output

The output level where marginal revenue equals marginal cost, guiding firms in maximizing their profitability.