A firm will work to differentiate its product up to the point that
A)it develops a product unlike anything else in the market.
B)the increase in revenue equals the cost of development.
C)revenue is maximized.
D)all innovation is exhausted.
E)the increase in product price as a result of research equals the price of the competition.

Question

Quizplus · Accepted Answer

Differentiating a product up to the point where the increase in revenue equals the cost of development ensures that the firm maximizes its profit without overspending on differentiation that doesn't yield proportional returns.

A Firm Will Work to Differentiate Its Product Up to the Point