Scenario 16-4
Delish, a moderately priced restaurant, has recently announced intentions to open a restaurant in Boston, MA. Assume that the restaurant market in Boston is characterized by monopolistic competition.
-Refer to Scenario 16-4. As a result of the new restaurant, diners in Boston are likely to experience a

Question

Quizplus · Accepted Answer

The opening of Delish restaurant in Boston will create a product-variety externality, which is a positive externality, as it will increase the variety of dining options available to consumers in the local market. This will result in increased competition among restaurants, forcing them to improve the quality of their food and services. As a result, diners in Boston are likely to benefit from the increased product variety and competition.

Scenario 16-4 Delish, a Moderately Priced Restaurant, Has Recently Announced Intentions to Intentions