Zinc Communications Developed a New Type of Cellular Telephone That

Multiple Choice

Zinc Communications developed a new type of cellular telephone that has a three-dimensional (3-D) screen. The company holds a patent on this technology, so they are the only seller of the 3-D phone when it is introduced. Over time, other companies introduce phones that are similar but not identical (i.e., they do not violate the patent held by Zinc) . What happens to the demand for 3-D phones facing Zinc and to the profit-maximizing price for the 3-D phone as these similar products enter the market?

A) Demand becomes less elastic, price increases.
B) Demand becomes less elastic, price declines.
C) Demand becomes more elastic, price increases.
D) Demand becomes more elastic, price declines.