Which of the following describes the infant industry argument for protectionism?
A) Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets.
B) Domestic producers in high-wage countries must be protected from foreign producers in low-wage countries to produce a level playing field.
C) An industry must be protected in its early stages of development so that firms can compete with government-subsidized foreign competition.
D) Some strategic industries must be protected to ensure adequate supplies of resources needed for national defense in emergencies.
A
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The above figure shows the market for pizza. The market is in equilibrium when some of the pizza firms go out of business. What point represents the most likely new price and quantity?
A) A B) B C) C D) D E) E
Assume that prices have risen in a given economy by an average of 5 percent over the last nine years. If consumers base their expectations about future price movements on that knowledge alone their forecasts rely on ________
A) reverse expectations B) adaptive expectations C) rational expectations D) monetary expectations