For a New Product to Be Profitable, It Must

question 15

Multiple Choice

For a new product to be profitable, it must

• A) enable customers to obtain greater total utility from their money income.
• B) be less expensive than existing substitute products.
• C) have greater marginal utility than existing substitute products.
• D) embody process innovation.

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Definitions:

Insurance Premium

The amount of money an individual or organization pays for an insurance policy, providing coverage against specific risks over a defined period.

Expected Loss

a calculation used in finance and insurance to estimate the average financial loss or cost associated with an investment or insurance policy over a period.

Adverse Selection

A situation in which one party in a transaction has more information than the other, leading to an imbalance and potentially poor market outcomes, commonly seen in insurance markets.

Insurance

A financial product or agreement that provides compensation for specific losses or damages in return for payments made.