Question

A. What does the product cycle model postulate? What are the various stages in a product life cycle?

B. Explain why the Heckscher- Ohlin theory is a general equilibrium model?

Answer 1

Ans: A - The product life cycle postulate about time period of development of product or item then introduced in market and after that how it is taken out from market because it non performance in market where it diminished.

Product life cycle has four stages

- Introduction

first stage of product life cycle where research and development being done for product and product being in first stage, where it is been introduced in market. Promotion and advertisement being done for product.

Growth:

Second stage in which product has been accepted by the customer and sales increases steadily and face competition but in lower number and there are improvement being rendered to product.

Maturity:

Third and most important stage of life cycle where product has reached it peak where it enjoy competition and many will emerge to rival the product making tight and high competition.

Decline:

This is last stage of product where product face decreasing result and product has been reached to is peaked and going on saturation point from where its sales been decreasing slowly. Product being seen as old and outdated for customer eventually being replaced by other.