A Firm That Is First to the Market with a New

question 158

Multiple Choice

A firm that is first to the market with a new product frequently discovers that there are design flaws or problems with the product that were not anticipated.How do these problems affect the innovating firm?

• A)The firm is protected by a first-mover advantage: initial design flaws tend not to harm a firm significantly because consumers resist changing products for fear of incurring high switching costs.
• B)They reduce profits for the new innovations and open the door to competitors who can enter the new market with a better product.
• C)Because these design flaws were not anticipated, consumers tend to be more forgiving and are likely to remain loyal to the company and its products.
• D)The firm's cost increases as it improves the product but it will not be able to raise its price for fear of alienating customers. Consequently, its profits will erode although its market share remains secure.

---

Definitions:

Vacuum Erection Device

A medical instrument used to help achieve and maintain an erection by creating a vacuum around the penis, enhancing blood flow.

Sex Therapy

A therapeutic approach focused on addressing issues related to human sexuality and sexual function, often involving counseling and education.

Spectator Role

A state of mind that some people experience during sex, focusing on their sexual performance to such an extent that their performance and their enjoyment are reduced.

Sensate Focus

A treatment for sexual disorders that instructs couples to take the focus away from orgasm or intercourse and instead spend time concentrating on the pleasure achieved by such acts as kissing, hugging, and mutual massage. Also known as nondemand pleasuring.