1 The infant industry argument is that: a.protectionism promotes complete specia
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Question
1 The infant industry argument is that:
a.protectionism promotes complete specialization in the country on the basis of comparative advantage.
b.new industries should be protected from foreign competition until they have had adequate time to develop.
c.protectionism should be used to create a level playing field for the domestic firms to compete with foreign firms.
d.developing industries should be allowed to face foreign competition.
e.those industries that produce products for infants should be protected.
2. One of the primary objectives of the WTO is:
a.to enable the western countries to emerge as major players in the international trade.Explanation / Answer
Answer 1) To understand the concept of infant protectionism, it becomes important to realise what an infant industry means.
An infant industry basically refers to one which is relatively new in business. It does not have the economies of scale. Meaning it does not sell in such high volumes that it can run its business at an optimum level.
The term infant industry protectionism was coined by Alexander Hamilton in the year 1790 in his "Report on Manufacturers".
"The core of the argument is that budding or nascent industries often do not have the economies of scale (as explained above) that their older competitors from other countries (Companies in developed markets may be growing differently at this market stage) may have, and thus need to be protected until they can attain similar economies of scale".
Therefore an explaination to this point is best answered by option ("B") all other options do not accomodate all the points as listed above, so cannot be considered as an optimum answer.
Question 2)
The world trade center was established in the year 1995 and at present has a total of 164 member states. The prime objective of this organisation, was to make the entire world a global market with free or undiscrimatory trade. The provisions of the World trade organistaion helps in assuring that free trade is conducted among participating nations.
Therefore, in this case option (E) to reduce trade barriers created by the different countries. Is the most optimum answer of all. All other options stated above give an incorrect picture of the core objective of WTO which is to reduce the trade barriers among participating nations, and give them a platform in case of any wrongdoing.
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