A small country in Central America previously produced all of its own clothing because it has a strong textiles industry. Recently, it began importing clothing from Philippines, Vietnam, and Bangladesh. What is the likely result for the importing country?
A) it will experience higher clothing prices
B) it will shift additional resources into its own textile industry
C) it will shift resources from textiles to a higher value industry
D) it will export less overall

Question

Quizplus · Accepted Answer

By importing clothing from other countries, the Central American country is likely shifting resources away from its own textile industry. This may allow the country to focus on developing other higher value industries, such as technology or tourism, that can bring in more revenue than the textile industry. While there may be some short-term effects on clothing prices and exports, the long-term benefits of shifting resources towards more profitable industries could outweigh these drawbacks.

A Small Country in Central America Previously Produced All of Its