The diagram below shows the domestic demand and supply curves for denim jeans in Canada. The prevailing world price is PW. Assume that all jeans are identical.
FIGURE 34- 2
-According to the infant- industry argument for protection, a new small industry
A) may need protection temporarily until it can exploit its economies of scale.
B) must be protected in order to provide a domestic supply of the product.
C) will need protection once it has exploited available economies of scale.
D) must be protected even if it will never have a comparative advantage.
E) must be protected permanently to provide for a diversified economy.
Correct Answer:
Verified
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