Final answer:
A genuinely new product offers innovative benefits to consumers, leading to a temporary competitive advantage and above-normal profits. Market competition incentivizes innovation, which can lead to better quality products, diversity, and potentially lower prices.
Step-by-step explanation:
The question, which aims to identify the characteristics of a genuinely new product, such as the iPhone once was, leans towards offering innovative benefits to consumers. A genuinely new product distinguishes itself not necessarily by lower prices or only having two new features, but by providing groundbreaking and unique benefits that were previously unavailable. This innovation is the hallmark of a product that can captivate the market and, at least temporarily, secure a competitive advantage and the potential for above-normal profits.
Market competition serves as a powerful incentive for innovation. Companies strive to innovate, developing new technologies and features that can be leveraged to attract customers, improve efficiencies, and reduce production costs, expanding the possibilities for consumer satisfaction. For example, when new products such as the iPhone are introduced, they typically come with innovative features that change consumer expectations and behaviors, setting a new standard in the market.
The process of including new products in economic indicators like the Consumer Price Index (CPI) may lag, but the impact of such products on the market is immediate and often profound. The resulting competition can lead to improved product quality and diversity, potentially driving down prices and fostering further innovation aimed at attracting and pleasing customers.