Suppose that government procurement liberalization results in the U.K.government importing automobiles from Germany,the low-cost EU manufacturer.Cost savings could result from all of the following except:
A) Competition effect
B) Scale-economy effect
C) Protective effect
D) Trade effect

Question

Quizplus · Accepted Answer

Protective effect refers to the protection of domestic industries from foreign competition through tariffs, quotas, or other trade barriers. Since government procurement liberalization involves the importation of goods from foreign countries, it would not result in a protective effect. However, cost savings could result from the competition effect (increased competition leading to lower prices), scale-economy effect (lower per-unit costs of production due to increased production), and trade effect (access to lower-cost imports).

Suppose That Government Procurement Liberalization Results in the U