When consumers are exposed to additional choices that result from the introduction of a new product,
A)their satisfaction is likely to be lowered as a result of their having to make additional choices.
B)a product-variety externality is said to occur.
C)an advertising externality is said to occur.
D)consumers are likely to experience negative consumption externalities.

Question

Quizplus · Accepted Answer

A product-variety externality occurs when the introduction of a new product increases the variety of choices available to consumers. This can result in positive or negative effects on consumer welfare, depending on the nature of the products and the preferences of the consumers. However, it does not necessarily lead to a lowering of satisfaction or negative externalities.

When Consumers Are Exposed to Additional Choices That Result from the Introduction