The Product Life Cycle Theory Predicts That Comparative Advantage Shifts

question 91

Multiple Choice

The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:

• A)the product is introduced in many countries simultaneously.
• B)the product is highly demanded in international markets.
• C)the demand for the product drastically declines in the domestic market of the country where it was invented.
• D)other countries have lower manufacturing costs using the now-standardized technology.
• E)other countries develop highly skilled labor forces to improve product quality.

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Definitions:

General Factory

A term that might refer to the main production facility where goods are manufactured or assembled, including all related operations.

Direct Labor-Hours

The sum of work hours directly associated with producing a product or offering a service.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products based on a specific activity base.

Traditional Costing System

An accounting method that assigns overhead costs to products based on a predetermined rate, typically using direct labor hours or machine hours.