What is most likely to happen when firms in an import-competing infant industry are offered subsidies?
A. The firms will be able to charge a price equal to the world price and still earn a profit.
B. The firms will face a perfectly inelastic demand curve.
C. The firms will be able to sustain only if they charge a higher price than the foreign firms.
D. The firms will suffer from diseconomies of scale.
Answer: A
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What will be an ideal response?
The political structure that is most consistent with economic growth and progress is
A) a dictatorship. B) centralization of power in the hands of an elected legislature and a president or prime minister. C) limited government, protection of individuals from aggression by others, and decentralized political decision-making. D) rule by the majority.
When quantity demanded is very sensitive to changes in price, we can say that:
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Goods and services sold to foreign buyers are
A. The terms of trade. B. Exports. C. A trade embargo. D. Imports.