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21 votes
21 votes
How could a tariff protect infant industry?

O It would make the price competitive with more established markets
It would help customers find the lowest price
It would discourage trade
It would help the American protect be more valued

User Mroach
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1 Answer

22 votes
22 votes

Answer:

It would discourage trade

Step-by-step explanation:

An infant industry can be defined as a manufacturing industry that is still in the early stage of its growth and development.

Simply stated, an infant industry is an industry that has just been newly established. Thus, infant industries do not have the wherewithal to compete with older industries (established competitors) because they are generally lacking in experience and size.

A tariff can be defined as tax levied by the government of a country on goods and services imported from another country.

According to the infant industry argument, economists agree that developing countries are allowed to place tariffs on import so as to develop their infant industries, diversify their economy and boost their comparative advantage.

Hence, a tariff protects infant industry because it would discourage trade by eliminating the import of goods and services from other countries.

User Levesque
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