question_answer

Direction: In the following questions, you have several brief passages with some questions following each passage. Read the passages carefully and choose the best answer to each question out of the four alternatives.

Passage I

Most developing countries expect domestic industries to be the basis for their programme of economic development. It is easy to reserve the local market for the new local industry by simply prohibiting imports that might compete. Although it may not be very efficient operation, local industry can be guaranteed a profit because high tariffs on or prohibition of imports force consumers within the nation to purchase the domestic product.

Local market industries may use the country's natural resources as well as its labour. The nation's foreign exchange credit can be conserved even if the production materials or parts must be bought from other countries, because these imports will usually cost less than if the finished products were imported.

However; there are also many disadvantages in relying on local market industries is the basis for industrial development. With excessive protection these industries will never have reasons to be efficient in their operations. With little or no competition from the world?s large manufacturers, the quality of their products will probably be inferior. Yet, the country's consumers, unable to buy the same item from foreign producers, must purchase from the local industry.

In most developing countries, real competition is unlikely to exist because of an inadequate market and a limited ability of the people to purchase. Companies may prosper because the power of the state has been used to force consumers to support them. This may mean that to provide employment for a hundred workers in the new factory and profit for the owner, thousands of people must pay extra for every shirt or pair of shoes they buy. This unfair type of industrial development often contributes to social and pay political tensions.

The author's view is that dependence on local market industries for industrial development is

A) the best way among all available means

B) not free from major demerits

C) helpful to make local industries self sufficient

D) essential for making the local industries more efficient