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 fact that the new product is priced higher than existing substitute products implies that consumers are willing to pay more for it, which suggests that the new product has higher marginal utility than the existing products.

Suppose That a Firm Successfully Introduces a Highly Profitable New