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.

Question

Quizplus · Accepted Answer

The new product having greater marginal utility than existing products means consumers derive more satisfaction or value from it, justifying its higher price. This does not violate economic laws, nor does it imply anything about the profitability of existing products or the nature of its utility curve.

Suppose That a Firm Successfully Introduces a Highly Profitable New