A Cross-Functional Product Development Team Has Been Examining a Proposed

question 112

Multiple Choice

A cross-functional product development team has been examining a proposed new product intensively for six months. The team has decided that although the product is unique and technologically-advanced, the cost of production will exceed the price that the consumer would be willing to pay. At this point, the product development team should

• A) engage in creative destruction.
• B) recommend that the product be sold at a loss in order to create a new market.
• C) turn over the product evaluation to a new product-development team which may have more passion for the product.
• D) recommend that the project be set aside.

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Definitions:

Perfect Substitutes

Goods that a consumer is completely indifferent between, meaning that one can replace the other in consumption without any loss of utility.

Income Effect

The income effect describes how a change in a consumer's income affects their purchasing power and consumption choices.

Substitution Effect

The economic concept describing how consumers react to a change in price of a good by substituting it with another good, holding their level of satisfaction constant.

Delphiniums

Are a genus of flowering plants known for their tall spikes of colorful flowers, commonly used in gardens and floral arrangements.