For a new product to be profitable, it must
A) enable customers to obtain greater total utility from their money income.
B) be less expensive than existing substitute products.
C) have greater marginal utility than existing substitute products.
D) embody process innovation.

Question

Quizplus · Accepted Answer

In order for a new product to be profitable, it must provide customers with greater total utility, meaning they must feel like they are getting more value for their money than they would from other products. This will encourage customers to purchase the product and generate profits for the company. Being less expensive or having greater marginal utility may help with this, but the key factor is total utility. Process innovation may also be helpful, but it is not essential for profitability.

For a New Product to Be Profitable, It Must