Why is it better to protect an infant industry with monopoly power with a tariff than a quota?
a. A tariff causes domestic production to increase, whereas a quota causes production to decrease.
b. A tariff causes domestic production to decrease, whereas a quota causes domestic production to increase.
c. A tariff will raise the domestic price above the world price, whereas a quota will not.
d. A quota will raise the domestic price above the world price, whereas a tariff will not.
Answer: a. A tariff causes domestic production to increase, whereas a quota causes production to decrease.
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In order for Ethiopia to increase its future economic growth, it must choose a point that is:
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