Question 36
International TradeThe argument of tariff protection in less developed economies is that such a measure would
- A.raise the price of goods affected abroad
- B.make consumers pay a higher price for the domestically produced output
- C.protect young industries from ruinous competition from abroad
- D.help reduce excess capacity in domestic industries
- 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.