There Are Several Conditions That Justify Limiting Imports to Ensure

question 127

Multiple Choice

There are several conditions that justify limiting imports to ensure the survival of the "infant industry" and to justify government protection. Which of the following is(are) a justification?

• A) Protection allows a firm an opportunity to move down along its average cost curve over time to become competitive at world prices.
• B) Protection allows a firm to reduce future costs and cause its average cost curve to shift downwards.
• C) There should not be any knowledge spillovers.
• D) Protection allows a firm to shift its total cost curve to the left.

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Definitions:

Total Investment

The aggregate amount of money dedicated to the purchase of assets, stocks, bonds, property, or other investment vehicles with the potential for generating profit or income.

Interest Rate

The cost of borrowing money or the return on invested resources, typically expressed as a percentage of the principal amount per time period.

Expected Rate

Typically refers to the predicted yield or return of an investment over a specific period.

Total Investment

The aggregate amount of money invested in an economy's capital assets over a specific period, including both private and public sector spending.