A new brewing company announces that it is releasing a new organic ale into the beer market.You can assume that the market for beer is characterised by monopolistic competition.As a result of the new organic ale, product-variety externalities would be manifest in the new product:

Question

Quizplus · Accepted Answer

Product-variety externalities arise when the introduction of a new product affects the perceived variety of the existing products in the market. In this case, if the new organic ale generates flavors that are different from other products in the beer market, it would increase the perceived variety of products available to consumers, and thus, there would be positive product-variety externalities. Duplicating the flavors of the most or least expensive products in the beer market would not increase variety and may even decrease it, while if the new ale's flavor is no different from existing products, there would be no increase in perceived variety.

A New Brewing Company Announces That It Is Releasing a New