(Figure: A Firm's Production With and Without Offshoring II) If the home country offshores components to a foreign country and then exports R&D to the foreign country and imports components from the foreign country, then:
A) the exchange is not a beneficial one for the home country.
B) the exchange results in an increase in output at lower prices.
C) consumers benefit due to this offshoring.
D) the exchange results in an increase in output at lower prices and the consumers benefit due to this offshoring.

Question

(Figure: A Firm's Production With and Without Offshoring II) If the home country offshores components to a foreign country and then exports R&D to the foreign country and imports components from the foreign country, then: 
A) the exchange is not a beneficial one for the home country. 
B) the exchange results in an increase in output at lower prices. 
C) consumers benefit due to this offshoring. 
D) the exchange results in an increase in output at lower prices and the consumers benefit due to this offshoring.

Quizplus · Accepted Answer

Offshoring components to a foreign country may result in lower cost of production and ultimately lower prices for the consumers. Moreover, exporting R&D to the foreign country may result in an increase in output, leading to a further decrease in prices. Therefore, the exchange results in an increase in output at lower prices and the consumers benefit due to this offshoring.

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