Suppose that a firm successfully introduces a highly profitable new product. If this new product offers less marginal utility per unit to consumers than existing substitute products, then the
A) laws of economics have been violated.
B) new product must have increasing, not diminishing, marginal utility.
C) existing products were being produced at a loss.
D) new product has a lower price than the existing substitute products.

Question

Quizplus · Accepted Answer

If the new product offers less marginal utility per unit than existing substitutes but is still highly profitable, it likely has a lower price, making it attractive to consumers despite the lower marginal utility.

Suppose That a Firm Successfully Introduces a Highly Profitable New