Suppose that the offshore assembly provisions (OAP) of the United States are granted to finished computers that are imported and also produced domestically. This policy will tend to
Options:
| a. cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States b. increase the price of computers to consumers in the United States c. Increase the production of computers in the United States d. increase the production of computer components in the United States |
The Correct Answer Is:
d. increase the production of computer components in the United States
The Offshore Assembly Provisions (OAP) in the United States can have a significant impact on the production and importation of finished computers. Let’s break down why the correct answer is “d” and then discuss why the other options are not as accurate.
Why “d” is the Correct Answer:
d. Increase the production of computer components in the United States:
The Offshore Assembly Provisions incentivize the assembly of finished computers within the United States, either through imports or domestic production. This policy encourages companies to perform more of the assembly work domestically, potentially leading to increased demand for computer components.
To meet this increased demand, manufacturers may choose to produce more computer components within the United States. This outcome aligns with the objective of fostering domestic production, supporting job growth, and enhancing the country’s technological manufacturing capabilities.
The Offshore Assembly Provisions (OAP) aim to foster a stronger domestic manufacturing base by incentivizing the assembly or production of finished computers within the United States.
By encouraging companies to perform more assembly work domestically, whether through imported components or locally sourced ones, there’s a notable push towards increasing the reliance on domestic production. This emphasis on domestic assembly not only supports the creation of jobs but also stimulates the broader computer industry.
Consequently, as the demand for assembling or manufacturing computers domestically rises, it’s highly probable that the production of computer components within the United States will experience a correlated upsurge to meet this increased demand, thereby strengthening the country’s technological and manufacturing capabilities.
Why the Other Answers are Not Correct:
a. Cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States:
This answer doesn’t directly align with the OAP’s objective. The policy aims to boost domestic production or assembly of computers, so while it may impact the sourcing strategies of foreign assemblers, the primary intention is to influence domestic production rather than the sourcing patterns of components used by foreign assemblers.
b. Increase the price of computers to consumers in the United States:
While increased domestic production might incur some changes in production costs, the goal of the OAP is to encourage local assembly or manufacturing without significantly increasing prices for consumers.
If anything, increased domestic production can sometimes help stabilize or even reduce prices due to reduced transportation costs and potential economies of scale.
c. Increase the production of computers in the United States:
This seems like a plausible answer at first glance, but the policy specifically targets the production or assembly of computer components, not the finished computers themselves.
While an increase in component production is likely, it might not necessarily translate directly to a substantial increase in the production of finished computers, as assembly could still involve imported components.
In summary, the Offshore Assembly Provisions primarily aim to bolster domestic assembly or production of computers, which is best reflected in the increase in the production of computer components within the United States (Option d).
The other options either focus on outcomes not directly related to the policy’s objectives or do not accurately capture the specific impact of the OAP on the domestic computer industry.
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