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

---

Definitions:

Unamortized Premium

The portion of the bond premium that has not yet been amortized or gradually written off against earnings over the life of the bond.

Open Market

A market structure where economic transactions are conducted freely and transparently, allowing for unrestricted competition.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its original purchase price.

Bonds

Fixed income investment products representing loans made by an investor to a borrower, typically corporate or governmental, which pay periodic interest payments.