Which of the following statements is true?
A) The infant-industry argument is valid only if the benefits of learning-by-doing in the infant industry spill over to other parts of the economy.
B) A subsidy to an infant industry is a more efficient way to protect it from foreign competition than a tariff on the competing foreign goods.
C) Both statements are true.
D) Neither of the statements is true.

Question

Quizplus · Accepted Answer

The infant-industry argument is valid when there are spillover benefits, and subsidies are generally more efficient than tariffs as they do not distort prices for consumers.

Which of the Following Statements Is True