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Launching a New Product Is a Big Risk Because Most

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Launching a new product is a big risk because most new products fail to make it in the marketplace. Managers are generally inclined to take the risk only if there is a 95 percent or better chance of success. However, your manager has just decided to market a new product with only a 75 percent chance of being successful. This behavior is characteristic of which of the following?


Definitions:

Average Expenditure

Price paid per unit of a good.

Competitive Buyer

A buyer in a market who has no influence on the market price and must accept the market price as given.

Marginal Expenditure Curve

Curve describing the additional cost of purchasing one additional unit of a good.

Factor of Production

An economic resource that is used to produce goods and services, including land, labor, capital, and entrepreneurship.

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