Which one of the following should NOT be included in the economic analysis of introducing a new product?

• A. The color preference of the CEO unrelated to market research
• B. The expected demand for the product
• C. The potential impact on existing products in the firm's portfolio
• D. The opportunity cost of resources used to produce the product

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the purpose of economic analysis in introducing a new product. Economic analysis focuses on factors that affect costs, revenues, and overall profitability, including market demand, opportunity costs, and effects on existing products.
2. Step 2: Identify relevant factors for economic analysis: expected demand for the product, potential impact on existing products, and opportunity cost of resources are all directly related to economic outcomes and should be included.
3. Step 3: Recognize that subjective preferences unrelated to market data, such as the CEO's personal color preference without market research backing, do not affect economic costs or benefits and thus should not be included in the economic analysis.
4. Step 4: Conclude that only factors with measurable economic impact—like demand forecasts, opportunity costs, and portfolio effects—are relevant for economic analysis, while personal preferences without market relevance are excluded.
5. Step 5: Summarize that the economic analysis should focus on objective, quantifiable factors that influence profitability and resource allocation, excluding subjective preferences unrelated to market conditions.