Q. Vernon's international product life cycle theory: (Solved)
1. helps explain the movement from absolute advantage to comparative advantage.
2. helps explain why a product that begins as a nation export often ends up becoming an import.
3. shows why the United States, surprisingly, exports relatively more laborintensive goods and imports capital-intensive goods.
4. extends the concept of comparative advantage by bringing into consideration the endowment and cost of factors of production.
- b. helps explain why a product that begins as a nation export often ends up becoming an import.