Product innovation will be successful only if it makes the product's
A) marginal utility increase.
B) price decrease.
C) marginal-utility-to-price ratio increase.
D) marginal-utility-to-price ratio decrease.

Question

Quizplus · Accepted Answer

Product innovation that increases the marginal-utility-to-price ratio will be successful because it adds more value to the product for the same price or a slightly increased price. This will make the product more attractive to customers and increase its demand. However, if the innovation decreases the marginal-utility-to-price ratio, the product will become less attractive to customers, and its demand will decrease. Decreasing the price of the product may attract more customers, but it may not necessarily lead to innovation. Therefore, option (C) is the best choice.

Product Innovation Will Be Successful Only If It Makes the Product's