Post Utme Al Hikmah University 2020 Economics Question 36

Practice objective / multiple choice question 36 from the 2020 Post Utme Al Hikmah University Economics examination.

Post Utme Al Hikmah University 2020 Economics Objective / Multiple Choice
Question 36 POST_UTME_AL-HIKMAH_UNIVERSITY • 2020 • ECONOMICS • objective

A firm is considering the introduction of a new product. The demand for the product is expected to be elastic, and the firm's marginal \cost is decrea\sing. U\sing the concept of elasticity of demand, explain why the firm might choose to introduce the new product.

Answer Options

A. Because the firm can increase its revenue by increa\sing the price of the product
Correct Answer B. Because the firm can increase its profit by introducing the new product and capturing a larger market share
C. Because the firm can reduce its \costs by introducing the new product and increa\sing its production
D. Because the firm can increase its market power by introducing the new product and reducing competition
Correct Answer
B
Correct Option:
Because the firm can increase its profit by introducing the new product and capturing a larger market share

About This Question

This is Post Utme Al Hikmah University 2020 Economics Question 36. It is one of the objective questions from the 2020 Post Utme Al Hikmah University Economics examination.

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