The infant industry argument is that: a. Protectionism promotes complete specialization in the country based on comparative advantage. b. New industries should be protected from foreign competition until they have had adequate time to develop. c. Protectionism should be used to create a level playing field for domestic firms to compete with foreign firms. d. Developing industries should be allowed to face foreign competition. e. Those industries that produce products for infants should be protected.
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Step 1: The infant industry argument is the idea that new industries should be protected from foreign competition until they have had enough time to develop and become competitive. Show more…
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Consider each argument for limiting international trade: The national security argument suggests that national security requires that strategically important goods be produced domestically. The infant industry argument suggests that protection can help infant industries develop. The unfair competition argument suggests that anti-dumping laws prevent unfair competition. The fair standards argument suggests that trade should not enable firms to skirt regulations. Determine which argument each statement is related to and whether the statement supports or opposes the argument. a. "Industries that are protected from foreign competition often never develop to a point where they can compete internationally." This statement opposes the infant industry argument. b. "If foreign importers do not meet U.S. requirements regarding child labor, safety, and the environment, they will have an unfair cost advantage over domestic firms." This statement supports the fair standards argument.
Jennifer S.
Which of the following statements does NOT describe the limitations of the policy of restriction to protect infant industries? a) There is not much evidence that protecting infant industries in advanced economies is needed. b) Infant industry protection often focuses on protecting labor-intensive industries, which is not critical in countries with large labor supplies. c) Countries waste their resources protecting infant industries, since most develop well without protections. d) Infant industry protection is rarely done in a way that makes the industry internationally competitive.
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Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. a. Living in an especially large country b. Having a domestic investment rate much higher than the domestic savings rate c. Having many other large economies geographically nearby d. Having an especially large budget deficit e. Having countries with a tradition of strong protectionist legislation shutting out imports
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