1.Show that if a firm’s price is less than its average cost, its profits must be negative.
2.Try to think of several products that have undergone cycles. What are the underlying characteristics of the products in question?
3.Using the Linder hypothesis as applied to the product cycle, explain why the United States was a leader in the development and export of automobiles. Explain why high-quality hockey skates were first produced in Canada.
4.In which ways is the product-cycle model inconsistent with the Heckscher-Ohlin model? In which ways are the two consistent?
5.How would you use the product-cycle model to help explain the existence of IIT?