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) 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.
D) 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.
B
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If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.) is negative,
A. Juan is better off getting up at 8 a.m. B. Juan is better off getting up at 9 a.m. C. Juan’s total utility from sleeping must be negative. D. Juan’s average utility from every hour he sleeps must be negative.
In understanding the differences of the impact of globalization on inflation in various nations it is important to consider
A) the degree of development in a nation. B) the structure of income taxes in the country. C) the degree of central bank independence. D) all of the above.
First and foremost, a market consists of
a. substitute goods b. complementary goods c. goods produced by the same firm d. goods produced with the same inputs e. goods that serve dissimilar purposes, which is why they are grouped
GDP and GNP are identical when
a. exports and imports exactly balance. b. all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers. c. production by domestic producers in other countries is greater than production by foreign producers domestically. d. there are no taxes.