In the Third Stage of the Product Life Cycle Theory,the

question 71

Multiple Choice

In the third stage of the product life cycle theory,the _____.

• A) demand and ability to produce the product grow in developed nations 
• B) product is standardized 
• C) lead innovation nation starts exporting more and importing less 
• D) production of a product commanding a price premium will be concentrated in the lead innovation nation

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Definitions:

Economically Efficient

A state where resources are allocated in a way that maximizes the production of goods and services, with no way to improve someone's condition without worsening another's.

Coase Theorem

A principle stating that if property rights are well-defined and transaction costs are low, parties will negotiate to correct externalities without government intervention.

Transaction Costs

Expenses incurred during the process of buying or selling goods and services that are not directly related to their price.

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.