According to the infant-industry argument, protection should be withdrawn from an infant industry when the companies in the industry
A) are listed on the domestic stock exchange.
B) become profitable.
C) double their sales revenues.
D) reach a sufficient size to compete with foreign firms.
Answer: D
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Under rate of return regulation, a regulated firm has an incentive to
A) use an efficient amount of capital. B) set its price equal to its marginal cost. C) hide losses from bad debts. D) inflate its costs.
In the mid-to-late 1990s, changes in the health care industry, substantially reduced health care costs relative to other goods and services. Which of the following is an appropriate description of the mechanism behind this supply shock?
A) The AS curve likely shifted to the right which likely explains the short-run fall in unemployment. B) The ensuing increase in productive capacity led to the rightward shift of the LRAS which is a likely explanation for the protracted decline in the unemployment rate of the 1990s. C) A positive output gap would have resulted in the short-run but it was eventually closed by a rightward shift of the LRAS which is a likely explanation for the protracted decline in the inflation rate of the 1990s. D) all of the above E) none of the above