Vernon predicts that as the demand for a new product starts to grow in other advanced countries, in the long run
A) the cost of labor in these advanced countries begins to increase.
B) it becomes profitable for foreign firms to invest in production facilities in the United States.
C) the firms in the United States begin to gain an absolute advantage.
D) it begins to limit the potential for exports from the United States.
E) the same product will begin to command a higher price.

Question

Quizplus · Accepted Answer

As demand grows in other advanced countries, local production may increase, reducing reliance on imports from the United States, thus limiting U.S. export potential.

Vernon Predicts That as the Demand for a New Product