How should marginal cost vary its original output and price

Reference no: EM13189448

Modifying a product to increase its "value added" benefits customers and can enhance supplier profits. For example, suppose an improved version of a product increases customer value added by $25 per unit. (In effect, the demand curve undergoes a parallel upward shift of $25.) If the redesign is expected to increase the item's marginal cost by $30, should the company undertake it, and (if so) how should it vary its original output and price?

Reference no: EM13189448

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