Offshoring to Low-Cost Countries Is Most Attractive for Products with

question 5

Multiple Choice

Offshoring to low-cost countries is most attractive for products with

• A)large production volume.
• B)high variety.
• C)low labor content.
• D)a high ratio of transportation cost to product value.

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Definitions:

Market Equilibrium

The state in which the supply and demand for a good or service are balanced, leading to a stable price.

Consumer Surplus

The variance between the total price consumers are ready and able to fork over for a good or service and the sum they ultimately pay.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually do pay.