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.
d
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Half of all your potential customers would pay $16 for your product but the other half would only pay $10 . You cannot tell them apart. Your marginal costs are $4 . If you set the price at $16, the expected profit is:
a. $3 b. $4 c. $5 d. $6
If the Canadian nominal exchange rate does not change, but prices rise faster abroad than in Canada, then the Canadian real exchange rate
a. does not change. b. rises. c. declines. d. None of the above is necessarily correct.
The law of comparative advantage explains why
What will be an ideal response?
An economy has two workers, Jen and Rich. Every day they work, Jen can produce 2 TVs or 10 radios, and Rich can produce 4 TVs or 12 radios. What is the opportunity cost for Rich to produce one radio?
A. 4 TVs B. 1/3 TV C. 1/6 TV D. 1/12 TV