Under which of the following situations will the infant industry argument for protection stand to be valid?
A)New firms are unable to obtain funds from the financial owing to inherent imperfections in the banking system.
B)The benefits from the early business investments accrue to the firms making these early investments.
C)Firms that produce important military hardware cannot be established without government support.
D)The more a country exports, the more the price of its exports fall relative to its imports.

Question

Quizplus · Accepted Answer

The infant industry argument is valid when new firms cannot obtain funds due to imperfections in the financial system, as they need protection to develop and compete with established foreign competitors.

Under Which of the Following Situations Will the Infant Industry