Multiple Choice
Scenario 16-5
McDonald's restaurants has recently announced intentions to open a new restaurant in Smalltown, Indiana. Assume that the fast-food restaurant market in Smalltown is characterized by monopolistic competition.
-Refer to Scenario 16-5. As a result of the new McDonald's, residents of Smalltown are likely to benefit from
A) a product-variety externality.
B) a business-stealing externality.
C) the fact that McDonald's will increase its production to achieve the efficient scale.
D) Both b and c are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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