The product life cycle theory predicts that comparative advantage shifts away from the country of origin if:

Question

Quizplus · Accepted Answer

The product life cycle theory suggests that the country that initially develops a new product will experience a comparative advantage in producing and exporting it. However, as the product becomes more standardized and widespread, other countries with lower manufacturing costs can produce it more efficiently, leading to a shift in comparative advantage away from the country of origin. Thus, choice D, where other countries have lower manufacturing costs using the now-standardized technology, is the correct option.

The Product Life Cycle Theory Predicts That Comparative Advantage Shifts