CFA Level I · CFA Level I Exam · International Trade
A government argues that a new domestic steel producer needs temporary tariff protection until it achieves economies of scale and can compete with established foreign firms. This argument for trade protection is best described as the:
This is the infant industry argument. It holds that a new domestic industry may need temporary protection, such as tariffs, so it can grow, gain scale and learn, and eventually compete with established foreign producers without further support.
- Ainfant industry argumentCorrect
- Bnational security argument
- Cdumping argument
Explanation
The infant industry argument says a young industry with potential comparative advantage needs temporary protection to grow and reach scale. The national security argument concerns strategic supply, and the dumping argument concerns foreign sales priced below cost.
Did you get it right without looking?
One question tells you little. A timed set on International Trade shows your real accuracy, how long you take and where you lose marks.
More International Trade questions
- A country's national saving is less than its domestic investment. This situation is most likely associated with a:
- According to the Heckscher-Ohlin model, a country with abundant capital and scarce labor is most likely to:
- Two countries have similar factor endowments, yet each exports and imports differentiated cars to and from the other. The explanation most c…
- A country protects its domestic farm sector by arguing it must maintain food production capacity in case of war or a trade embargo. This rat…
- Under the Ricardian model of trade, the source of comparative advantage is differences in:
- A country is a large importer of a good and imposes a tariff that lowers the world price of that good. The country's net national welfare ef…