PPF R&D Relative price of components = (Pc/PR) No trade Home firm equilibrium Home firm QR soquants Yo Qc Components If the home country offshores component production to a foreign country, then exports R&D services to the foreign country and imports components from the foreign country, then: the exchange results in an increase in output at lower prices and consumers benefit due to this offshoring. the exchange is not a beneficial one for the home country. consumers benefit due to this offshoring. O the exchange results in an increase in output at lower prices