Vernon’s International Product Life Cycle theory: A. 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 national export often ends up becoming an import. C. helps explain the movement from absolute advantage to comparative advantage. D. shows why the United States, surprisingly, exports relatively more labor‑intensive goods and imports capital‑intensive goods.
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The correct answer is B.
Vernon’s International Product Life Cycle theory explains that products typically begin as exports from a developed country, where they are produced and marketed. Over time, as the product matures and the market becomes saturated, production may move to lower-cost countries, causing the product to eventually become an import in its country of origin. This dynamic illustrates the life cycle of products in international trade.
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