Question

During the introduction stage sales are ______ and profit is ______.

Multiple choice question.
fairly stable; steady
growing rapidly; high
growing; declining
growing slowly; minimal

Answer 1

In the introduction stage, sales grow slowly and profits are typically minimal, as costs for development, marketing, and distribution are high.

Step-by-step explanation:

During the introduction stage of a product's life cycle, sales are growing slowly; profit is often minimal or may even be negative. This is because the product is new to the market and consumers are not yet aware of or familiar with it. Significant costs are incurred in product development, marketing, and distribution, all of which can outweigh the sales revenue. In a competitive market, firms making a profit have an incentive to expand, potentially causing new firms to enter the industry, which is known as entry.

This behavior can quickly alter the market structure and affect the profits of all firms in the industry. The decisions made by these firms, particularly in a perfectly competitive setting, where the main decision is to determine the quantity to produce, are critical to their success.