The product-variety externality is associated with the

A) producer surplus that accrues to incumbent firms in a monopolistically competitive industry.
B) loss of consumer surplus from exposure to additional advertising.
C) consumer surplus that is generated from the introduction of a new product.
D) opportunity cost of firms exiting a monopolistically competitive industry.

Product-variety Externality

The impact on consumers and producers resulting from an increase or decrease in the variety of products available in the market.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The amount a seller is paid for a good minus the seller’s cost of providing it.