We know with certainty that a consumer will buy a newly introduced product rather than an existing product when the
A)MU/ P of the new product exceeds the MU/ P of the existing product.
B)price of the new product is less than the price of the existing product.
C)MU of the new product is more than the MU of the existing product.
D)law of diminishing marginal utility applies to the existing product.

Question

Quizplus · Accepted Answer

The choice where the marginal utility per dollar (MU/P) of the new product exceeds that of the existing product is the correct answer. This is because consumers aim to maximize their utility for every dollar spent, so if the new product offers more utility per dollar, it is more likely to be chosen over the existing product.

We Know with Certainty That a Consumer Will Buy a Newly