The most efficient way to encourage the growth of an infant-industry is through
A)a voluntary export restraint.
B)a tariff.
C)a subsidy.
D)an import quota.
E)none of the above

Question

Quizplus · Accepted Answer

A subsidy is the most efficient way to encourage the growth of an infant-industry. It provides direct financial assistance to the industry, allowing it to compete with established industries in foreign markets. Tariffs, import quotas, and voluntary export restraints may provide short-term protection to infant industries but they can also lead to retaliation from trading partners and reduce overall economic welfare. Therefore, a subsidy is a better choice for the long-term growth of infant industries.

The Most Efficient Way to Encourage the Growth of an Infant-Industry