Question

The profit-enhancing impact of product innovation tends to be on all of the following, except the...

The profit-enhancing impact of product innovation tends to be on all of the following, except

  • the attractiveness of the product to buyers.

  • the firm’s revenues.

  • the firm’s cost of production.

  • the buyers’ utility derived from the product.

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Answer #1

Answer: the cost of production

Innovation refers to the process of bringing a new element in the product that distincts from the other product. Through innovation, cost of production does not enhance profit. If cost of production enhances profit, then there should be a chnage in the technique of production rather innovation.

Through innovation, a firm's revenues , the attractiveness of the product to buyers and buyers utility derived from the product can enhance the firm's profit.

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