Zinc Communications Developed a New Type of Cellular Telephone That

question 92

Multiple Choice

Zinc Communications developed a new type of cellular telephone that has a three-dimensional (3-D) screen. The company holds a patent on this technology, so they are the only seller of the 3-D phone when it is introduced. Over time, other companies introduce phones that are similar but not identical (i.e., they do not violate the patent held by Zinc) . What happens to the demand for 3-D phones facing Zinc and to the profit-maximizing price for the 3-D phone as these similar products enter the market?

• A) Demand becomes less elastic, price increases.
• B) Demand becomes less elastic, price declines.
• C) Demand becomes more elastic, price increases.
• D) Demand becomes more elastic, price declines.