Profits increase during the __________ stage of the product life cycle.

• A. growth
• B. decline
• C. introduction
• D. maturity

Answer: (A)

Verified step by step guidance

1. Understand the concept of the product life cycle, which includes four stages: introduction, growth, maturity, and decline.
2. Recognize that during the introduction stage, companies typically incur high costs for product development and marketing, leading to low or negative profits.
3. Identify the growth stage as the period when sales increase significantly, economies of scale are achieved, and profits begin to rise due to reduced costs per unit and increased market acceptance.
4. Note that during the maturity stage, sales growth slows, and profits may stabilize or decline due to increased competition and market saturation.
5. Understand that in the decline stage, sales and profits decrease as the product becomes outdated or replaced by newer alternatives.