Question

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

Answer 1

For a new product to be profitable if it  have greater marginal utility than existing substitute products.

Explanation:

The choice of the Consumer  is guided by his  preferences for specific products, the budget constraints, the price of the product , and the marginal utility of products.

A consumer always faces a  budget constraint  because the consumer only has that amount of money, that he can  spend on things that he desires.

The consumer choice  depends on the marginal utility of the product and its price. Because we know that as the  marginal utility declines with quantity, the price of the product does not vary, a consumer will tend to buy as much product until the marginal utility of the product falls below the marginal utility of other substitute products that the consumer can buy. Thus the consumer will stop buying more of  products when the marginal utility of an additional amount is less than the price of the product.

For a new product to be profitable if it  have greater marginal utility than existing substitute products.