Economic Model

singhag wrote:[spoiler]IMO C

My contender were C and E but E directly attact the condition which already said to be true that the industry can bank on the known demand...where as C says even if the demand is known and subsidies increases the prices for the customer the industry may not be successful[/spoiler]

OA please

ankit1383 wrote:The Japanese economic model created strong domestic industries through subsidies from its Ministry of Trade and by closing off competitive foreign firms to its domestic market. This strategy promised to help economic growth by incubating domestic industries. New Japanese industries could count on a known local demand and would be protected from competition by tariffs and other barriers. The program could reduce the amount of imports and therefore improve the nation's balance of trade.
Which of the following, based on the passage above, is a weakness in this economic strategy?

A) A protectionist policy will create animosity among other nations.
B) Fast growth of small industries will create a class of millionaires and increase the inequality of income.
C) Subsidies and import constraints keep domestic prices high and impose a burden on consumers.
D) Quotas are more regressive than tariffs.
E) The demand for the products made by the incubated industries would not be known.

[spoiler]New Japanese industries could count on a known local demand ....does this statement in the stimulas makes choice E as possible answer...[/spoiler]

brick2009 wrote:E cannot be true: because it is clearly stated in the stimulus that the demand is known.. "dustries could count on a known local demand and "..

this is a classical GMAT trap.. beware;)

C : directly attacks the argument by saying: consumers will pay more as the costs will be high...as high prices will mean lower demand...thus directly impacting the success of the incubated companies.