Question

ntricate Wiring Corp., based in Ohio, creates a brand new high-tech product. The demand for the product in the United States is high but very low or non-existent elsewhere. The company decides not to locate manufacturing facilities elsewhere and will simply meet the small foreign demand via exports. The theory that best explains the company's policy is product life cycle theory. mercantilism. the Leontief paradox. Heckscher-Ohlin theory. free trade theory.

Answer 1

Answer:

Product Life Cycle

Explanation:

Product Life Cycle is the phases based process, by which a product goes through. It has 5 stages :

• Introduction : New technology, less adopted, less demand & less sales. High per customer cost, loss incurred.  
• Growth : Product being adopted, more demand, more sales. Low cost per customer, profit rising begins.
• Maturity : Product completely adopted, peak sales, high profits.
• Decline : Product obsolete, sales & profit decline.

Wiring Corp based in Ohio created a new high tech product, having demand only in US not existent elsewhere : depicts 'Introduction' stage. The stage is characterised by - only few innovators selling the new product, small or no market of the new product, very less foreign demand (exports), high product development costs, loss incurred. So, the corp. decision of not locating manufacturing facility elsewhere & satisfying by less exports - also evidences presence of Introduction stage. As in the later stage only : product is sold by early adapters, other big sellers, small majority sellers.