A. Introductory stage B. Decline stage C. Maturity stage D. Growth stage

1. In which stage of the product life cycle are profits at their

And you think ... ?

Maturity stage

D. Growth stage

To determine in which stage of the product life cycle profits are at their highest, let's go through each stage and analyze their characteristics:

1. Introductory stage: In this stage, a new product is introduced to the market. Profits are typically low during this stage due to high costs associated with product development, marketing, and distribution. It takes time to build awareness and attract customers, so profits are generally not at their highest in this stage.

2. Growth stage: During this stage, the product starts gaining traction in the market, and sales increase rapidly. Profits typically start to rise as the product becomes more popular, economies of scale are achieved, and marketing costs may reduce relative to sales. However, competition may also intensify, leading to price competition that could affect profit margins.

3. Maturity stage: In the maturity stage, the product reaches its peak level of market penetration. Sales growth slows down, and competition becomes more intense. Profits can be highest in this stage due to economies of scale, efficient production, and established brand loyalty. However, profit margins might start to decline as price competition intensifies and companies may need to invest in product differentiation or marketing campaigns to maintain market share.

4. Decline stage: In this stage, the product's sales begin to decline due to market saturation, changing customer needs, or the emergence of more innovative alternatives. In the decline stage, profits are typically low or even negative as companies may experience decreasing revenues, increased costs for maintaining or discontinuing the product, and potential write-offs or discounts to clear remaining inventory.

Based on the above analysis, the correct answer is C. Maturity stage. Profits are generally at their highest during the maturity stage of the product life cycle when economies of scale are realized, and the product has established a strong market presence.