Which trade theory suggests that comparative advantage tends to shift from one nation to another as a product matures?
A) factor-price equalization theory
B) factor-endowment theory
C) product life cycle theory
D) theory of comparative advantage

Question

Quizplus · Accepted Answer

The product life cycle theory suggests that comparative advantage tends to shift from one nation to another as a product matures. As a product becomes more mature, its production becomes more standardized and less reliant on specialized skills or resources, which means that countries with lower labor and production costs may become more competitive in producing and exporting that product. This theory suggests that a country's comparative advantage can change over time and supports the idea of dynamic comparative advantage.

Which Trade Theory Suggests That Comparative Advantage Tends to Shift