Consumers Will Make a Decision to Purchase a New Product

question 101

Multiple Choice

Consumers will make a decision to purchase a new product only if it

• A)has a lower marginal utility per dollar spent than another product.
• B)is recommended as a valuable product by other consumers.
• C)increases the total utility they obtain from their limited income.
• D)can be sold at a lower price than that for a competing product.

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Definitions:

Service Companies

Businesses that provide intangible products or services to consumers or other businesses rather than manufacturing goods.

Fixed

Costs that do not change with the level of production or sales activity, such as rent, salaries and insurance.

Variable

A quantity that can change or vary, often used in mathematics and statistics to represent an element that can assume different values.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed to variable costs.