P = MC is a recipe for financial loss in an innovative firm established by an innovative entrepreneur. Explain.
What will be an ideal response?
Invention cannot be successful financially if the price is set equal to marginal cost, as must happen in a perfectly competitive market. Such a price would not cover any of the R&D cost and the related outlays, which are entirely absent from the marginal cost of an innovation. So for innovative products, P = MC is a recipe for financial loss and disaster in an innovative firm established by an innovative entrepreneur.
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When the price level increases, aggregate planned expenditure decreases, which leads to
A) a rightward shift of the aggregate demand curve. B) neither a movement along nor a shift of the aggregate demand curve. C) a downward movement along the aggregate demand curve. D) an upward movement along the aggregate demand curve. E) a leftward shift of the aggregate demand curve.
The demand for markers is _______________________ than is the demand for Sharpies because ____________________.
A. less price elastic; markers require a smaller portion of one's income B. more price elastic; markers require a smaller portion of one's income C. less price elastic; the scope of the market for markers is more broadly defined D. more price elastic; the scope of the market is for markers is more broadly defined
The demand curve for labor of Coca-Cola manufacturers will not shift to the right if:
a. d and e. b. the price of Coca-Cola increases. c. the firms innovate with new technology that raises labor productivity. d. the price of Pepsi decreases. e. Coca-Cola workers become unionized.
Economist Douglass North suggests that the term used to describe government bodies, development agencies, and international groups should be:
A. organizations. B. institutions. C. agencies. D. groups.