Which Trade Theory Contends That a Country That Initially Develops

question 20

Multiple Choice

Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no longer manufacture the product?

• A) Theory of factor endowments
• B) Theory of overlapping demands
• C) Economies of scale theory
• D) Product life cycle theory

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Definitions:

Pawn Shop

A retail business that lends money to people who bring in valuable items which they leave with the pawnbroker as collateral.

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Initial Cost

The original cost of acquiring an asset, including purchase price and any expenses incurred to put the asset into use.