JAMB Economics 1985 Question 36

Question 36

International Trade

The argument of tariff protection in less developed economies is that such a measure would

  1. A.raise the price of goods affected abroad
  2. B.make consumers pay a higher price for the domestically produced output
  3. C.protect young industries from ruinous competition from abroad
  4. D.help reduce excess capacity in domestic industries
  5. E.stifle private investment initiatives.
Show the answer and explanation

Answer: C (protect young industries from ruinous competition from abroad)

Explanation

The infant-industry argument says tariffs shield new local industries from strong foreign rivals until they can compete.