Question

Prolonged protection from foreign competition had which effect on domestic producers?

Options

• It exposed them to intense rivalry from foreign firms

• It forced them to cut costs and raise exports sharply

• It gave them strong incentives to improve product quality

• It resulted in poor product quality and no incentive to improve

Answer 1

Because protection was prolonged, domestic producers faced no competitive pressure from foreign firms. This resulted in poor product quality, with producers having no incentive to improve, since their protected position was secure regardless of quality.