Jillone Technocraft Has Developed a New Kind of Couch That

question 19

Multiple Choice

Jillone Technocraft has developed a new kind of couch that can be converted into bedding without the efforts of having to pump air in or out. The new technology behind the making of this couch is unique and a complete innovation by the design team at Jillone. Although the company is not sure how effective it will be in attracting a new customer base, it is still confident and wants to take the risk. Which of the following is most likely the reason Jillone has chosen to incorporate market-creating innovation?

• A) It wants the company to grow in size and achieve an increase in its revenue.
• B) Profit generation is certain.
• C) It wants to test its product in the market before the product's release.
• D) Time-consumption during the development phase is minimal.

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Definitions:

Returns to Scale

The rate at which output increases as inputs are increased proportionally, indicating how efficiently larger production scales affect production volume.

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm or operation grows in scale, opposite of economies of scale.

Returns to Scale

The change in output resulting from a proportionate increase in all inputs; the concept explains how output changes with varying levels of input.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically resulting in lower per-unit costs with increased production.