This Theory Was Developed by Vernon and Explains Why U

question 58

Multiple Choice

This theory was developed by Vernon and explains why U.S. manufactures shift from exporting to FDI.

• A) portfolio theory
• B) product Life Cycle theory
• C) internalization theory
• D) exporting theory

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Definitions:

MRTS

The Marginal Rate of Technical Substitution, the rate at which one input can be replaced by another while keeping output constant.

Isoquant Map

An isoquant map is a graphical representation used in economics to show combinations of inputs, like labor and capital, that produce the same level of output, illustrating how inputs can be substituted for one another.

Machine Hours

A measure of production output or usage expressed in terms of the total hours that machines are operated within a specified period.

Fixed Proportion

A production scenario where inputs must be used in specific, unchangeable ratios to produce output, often resulting in a limitation on the flexibility of the production process.