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:

Expenditures

Outflows of money or other valuable assets that are paid or incurred as a result of acquiring goods or services.

Acquisition Cost

The total cost that a company recognizes for bringing an asset into its possession, including purchase price, installation charges, and other necessary expenditures.

Salvage Value

The anticipated salvage value assigned to an asset after its period of use concludes.

Double-Declining-Balance

A method of accelerated depreciation that doubles the straight-line depreciation rate.