ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
Which of the following is generally regarded as an argument in favour of protectionist trade policies, as opposed to free trade?
Protecting infant industries is an argument for protectionism. New domestic industries may be unable to compete with established foreign firms, so tariffs or quotas shelter them while they grow. Lower prices, specialisation and economies of scale are arguments for free trade.
- AIt protects infant industries until they can compete internationallyCorrect
- BIt increases consumer choice and lowers prices
- CIt encourages specialisation based on comparative advantage
- DIt promotes economies of scale through larger markets
Explanation
Protectionism is often justified by the need to shelter new, developing industries from established foreign competitors. The other options are standard arguments for free trade, relating to choice, specialisation and scale economies.
Did you get it right without looking?
One question tells you little. A timed set on Political and legal factors affecting business shows your real accuracy, how long you take and where you lose marks.
More Political and legal factors affecting business questions
- Two rival manufacturers privately agree to fix the selling price of their products at a high level. Which area of law is designed to prevent…
- Country A has a 20% tariff on imported steel. A domestic steel producer in Country A is most likely to benefit from the tariff because:
- A dominant supplier of software tells retailers that they will receive its popular product only if they also agree not to stock any rival's …
- Which of the following best describes a customs union?
- A government regulator is reviewing a proposed takeover between two of the three largest supermarket chains in a country. Which is the main …
- Which of the following is an argument made in favour of allowing a firm to hold a monopoly position, rather than an argument against it?