Asked by
ceola harris
on Nov 26, 2024
Verified
Suppose that a firm successfully introduces a highly profitable new product. If this new product is priced higher than existing substitute products, then the
A) new product has greater marginal utility than the existing products.
B) laws of economics have been violated.
C) new product must have increasing, not diminishing, marginal utility.
D) existing products were unprofitable to produce.
Marginal Utility
The change in satisfaction or utility an individual gains from consuming an additional unit of a good or service.
- Acquire insight into the determination of consumer preferences for new versus existing products, with an emphasis on marginal utility (MU), price (P), and the ratio of marginal utility to price (MU/P).
- Comprehend the essential contribution of innovation in products and processes to a firm's competitive advantage and profitability.
Verified Answer
AA
Learning Objectives
- Acquire insight into the determination of consumer preferences for new versus existing products, with an emphasis on marginal utility (MU), price (P), and the ratio of marginal utility to price (MU/P).
- Comprehend the essential contribution of innovation in products and processes to a firm's competitive advantage and profitability.
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