There are several conditions that justify limiting imports to ensure the survival of the "infant industry," and to justify government protection. Which of the following is(are) a justification?
I. Knowledge spillovers should be likely.
II. Protected firms should have a good chance of moving down along their average cost curves over time to become competitive at world prices.
III. Protected firms should have a good chance to reduce future costs and cause their average cost curves to shift downwards.
a. I
b. II
c. I and III
d. I, II, and III
Ans: c. I and III
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A) surplus; downward B) surplus; upward C) shortage; downward D) shortage; upward
Problems in measuring the cost of living include ***************
A. Substitution bias B. The introd of new goods C. Unmeasured quality changes D. All E. None