According to the product life-cycle theory, the locus of global production initially switches from the United States to other advanced nations and then from those nations to developing countries. As a result,
A) U.S. imports become less capital-intensive than U.S. exports.
B) the pattern of international trade is affected by differences in factor endowments rather than differences in productivity.
C) over time, the United States switches from being an exporter of a product to an importer of the product.
D) the wage rates in the United States decrease.
E) developing nations fail to upgrade their skill levels to compete with advanced countries.

Question

Quizplus · Accepted Answer

According to the product life-cycle theory, as a product matures, production shifts to countries where it can be produced more cost-effectively. Initially, the U.S. exports the product, but as production moves to other countries, the U.S. eventually becomes an importer of the product.

According to the Product Life-Cycle Theory, the Locus of Global