(Figure: A Firm's Production With and Without Offshoring I) If component parts become relatively cheaper abroad, this firm will have an incentive:
A) to offshore (import) components and export R&D.
B) to import R&D products along with skilled workers.
C) to export both R&D and component parts.
D) to make few changes in the trading regime because of the delicate international balance.

Question

(Figure: A Firm's Production With and Without Offshoring I) If component parts become relatively cheaper abroad, this firm will have an incentive: 
A) to offshore (import) components and export R&D. 
B) to import R&D products along with skilled workers. 
C) to export both R&D and component parts. 
D) to make few changes in the trading regime because of the delicate international balance.

Quizplus · Accepted Answer

If component parts become relatively cheaper abroad, it makes economic sense to import those parts and reduce production costs. The firm may then choose to export R&D to countries where doing so is cheaper, ultimately increasing profits.

(Figure: a Firm's Production with and Without Offshoring I) If