A Firm Must Devote People, Time, and Money to Designing

question 189

Multiple Choice

A firm must devote people, time, and money to designing a new product.Because any firm has only limited resources, it

• A)should wait until its competitors develop a similar product before deciding on devoting resources to its own product development.
• B)is not able to develop more than one new product at a time.
• C)must be certain that the product it chooses to develop will be successful or it will not be able to stay in business.
• D)faces a trade-off, because resources used to develop one product will not be available to develop another product.

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Definitions:

Optimal Strategy

Strategy that maximizes a player’s expected payoff.

Auctioned

A method of sale where goods or services are sold to the highest bidder.

Highest Bidder

The individual or party that offers the most money for an item in an auction or competitive bidding situation.

Consumer Surplus

Difference between what a consumer is willing to pay for a good and the amount actually paid.