Which of the following is a long-run theory,emphasizing changes in the trading position of a nation over a number of years?
A) Theory of factor endowments
B) Comparative advantage theory
C) Theory of the product cycle
D) Overlapping demand theory

Question

Quizplus · Accepted Answer

The theory of the product cycle is a long-run theory that looks at how a nation's trading position evolves over time as the production and marketing of a product mature. It suggests that a firm will begin by producing for its domestic market, then move into exporting to advanced economies, and finally shift production to developing economies as the product becomes standardized and competition intensifies. The other options - theory of factor endowments, comparative advantage theory, and overlapping demand theory - focus more on explaining trade patterns in the short run.

Which of the Following Is a Long-Run Theory,emphasizing Changes in the Trading