In the context of introduction to economics, what is a likely outcome when a firm uses crowdsourcing to generate product ideas?

• A. The firm will always produce the most profitable product.
• B. Product development costs will automatically increase.
• C. Crowdsourcing eliminates the need for market research.
• D. The firm can access a diverse range of ideas from a large group of people.

Answer: (D)

Verified step by step guidance

1. Understand the concept of crowdsourcing: it involves obtaining ideas, services, or content by soliciting contributions from a large group of people, especially from an online community.
2. Recognize that crowdsourcing allows a firm to tap into a wide and diverse pool of knowledge and creativity, which can lead to a variety of innovative product ideas.
3. Analyze why crowdsourcing does not guarantee the most profitable product: while it provides many ideas, the firm still needs to evaluate and select the best ones based on market demand and feasibility.
4. Consider that crowdsourcing does not automatically increase product development costs; in fact, it can sometimes reduce costs by outsourcing idea generation rather than relying solely on internal R&D.
5. Note that crowdsourcing complements but does not eliminate the need for market research, as firms still need to test and validate ideas before launching products.