Scenario 16-6 Ike's Ice Cream Has Decided to Open a New Ice

question 511

Multiple Choice

Scenario 16-6
Ike's Ice Cream has decided to open a new ice cream parlor in Mayville, MS. The market for ice cream parlors is monopolistically competitive.
-Refer to Scenario 16-6. As a result of the new Ike's Ice Cream parlor, existing ice cream shops located in Mayville are likely to experience a

• A)business-stealing externality, which harms producers.
• B)business-stealing externality, which benefits producers.
• C)product-variety externality, which harms consumers.
• D)product-variety externality, which benefits consumers.

---

Definitions:

Labor Markets

The supply and demand for labor, where employers seek to hire workers and workers seek employment.

Contract

A legally binding agreement between parties that outlines the terms and conditions under which a transaction or exchange is to take place.

Means-Tested Programs

Government programs and assistance available only to individuals or families whose income and assets fall below specified thresholds.

Consumption Tax

A tax on the purchase of goods and services, levied at the point of consumption.