Subsidies mean that infant industry firms can likely charge: a. Higher prices while competing with foreign firms. b. Higher prices than foreign firms are able to receive. c. A price equal to the world price and still earn a profit. d. The foreign tariff to other customers of the foreign firm.

Subsidies mean that infant industry firms can likely charge:
a.    Higher prices while competing with foreign firms.
b.    Higher prices than foreign firms are able to receive.
c.    A price equal to the world price and still earn a profit.
d.    The foreign tariff to other customers of the foreign firm.

Answer

• c.    A price equal to the world price and still earn a profit.
  Explanation:
  An infant industry can be protected by imposing a production subsidy for domestic production which is in form of government payment to producers. It can be fixed dollar subsidy for each unit produced or a certain percentage on all goods produced. Usually, infant industries face competition from well established industries that can offer low prices. By using subsidies, the infant industry can charge low prices that is equal to the world price and still earn a revenue.

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