(Figure: A Firm's Production With and Without Offshoring II) If the relative price of components is cheaper in a foreign country than the home country, then:
A) it is likely that the home country will offshore the R&D to the foreign country.
B) it is likely that the foreign country will offshore the components to the home country.
C) it is likely that the home country will offshore components to the foreign country.
D) no meaningful exchange is possible between the home and foreign country.

Question

(Figure: A Firm's Production With and Without Offshoring II) If the relative price of components is cheaper in a foreign country than the home country, then: 
A) it is likely that the home country will offshore the R&D to the foreign country. 
B) it is likely that the foreign country will offshore the components to the home country. 
C) it is likely that the home country will offshore components to the foreign country. 
D) no meaningful exchange is possible between the home and foreign country.

Quizplus · Accepted Answer

If the relative price of components is cheaper in a foreign country than the home country, it is likely that the home country will offshore components to the foreign country in order to save on costs.

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