A consumer will buy a new product rather than an existing product
A) when the MU/P of the new product is less than the MU/P of the existing product.
B) when the substitution of the new product for the old product increases the consumer's total utility.
C) only if the new product has a lower price than the existing product.
D) only if the MU of the new product exceeds the MU of the existing product.

Question

Quizplus · Accepted Answer

Consumers make decisions based on maximizing their total utility. Therefore, they will only buy a new product rather than an existing one if the new product increases their total utility. This can be achieved through a variety of factors such as improved quality, convenience, or functionality. The MU/P and price of the products are not the only determining factors in a consumer's decision-making process.

A Consumer Will Buy a New Product Rather Than an Existing