Question

The Argentine government has recently been imposing heavy trade restrictions. Taxes on exports are a major source of revenue for the country. Being a part of the Mercosur customs​ union, the country cannot independently impose import tariffs but has found other ways to restrict imports. The idea behind this is to​ "supply the growing domestic market with local labor and​ production." As a result of these​ restrictions, the markets for various products have been affected. With BlackBerrys in short supply within Argentina and no possibility of​ imports, a multinational manufacturer is in fact assembling them in the​ country's province of Tierra del​ Fuego, off the coast of South America. The cost thus incurred is estimated to be 15 times higher than what it costs to produce BlackBerrys in Asia.

Which of the following, if true, would be the strongest evidence in support of the restrictive trade policies?

A. The evidence on how efficiently firms can operate under trade restrictions is mixed
B. Many Argentine firms are efficiently operating in markets that were flooded with imported goods before the trade restrictions were imposed
C. Argentina was one of the leading exporters of agricultural products prior to the trade restrictions.
D. Even during the period when India imposed high trade barriers, the Indian GDP grew at an average rate of 4%.
E. There is free movement of manpower and capital across the Mercosur member nations

Answer 1

The correct answer is option (B) Many Argentine firms are efficiently operating in markets that were flooded with imported goods before the trade restrictions were imposed

Step-by-step explanation:

The government of Argentine discovered that the market is filled with imported goods. Argentine firms cannot efficiently operate in the market due to large number of imported goods in the market. He then looked for ways to restrict importation by supplying domestic markets with labor and production.

The restricting affected the imported goods in the market but it allows the Argentine firms to operate fully.

Answer 2

The correct option is "B"

Step-by-step explanation:

The burden substantial exchange limitation by The Argentine government cause to upset exchange and influences imports Due to prohibitive arrangement exchange it builds the expense of bringing in products and causing to diminish in supply in Argentinean advertise Before the exchange limitations, the market was working effectively, and was overwhelmed with imported merchandise because of the exchange limitations, import merchandise decays because of increment in cost.