How does the introduction of a new good or service create value in an economy?

• A. By decreasing the total quantity of goods available
• B. By increasing the price of all existing goods and services
• C. By reducing the overall level of competition in the market
• D. By satisfying previously unmet consumer needs or wants

Answer: (D)

Verified step by step guidance

1. Understand the concept of value creation in microeconomics, which often relates to how goods and services satisfy consumer preferences and improve overall welfare.
2. Recognize that the introduction of a new good or service can create value by addressing consumer needs or wants that were previously unmet, thereby increasing consumer satisfaction.
3. Analyze why the other options do not create value: decreasing total quantity reduces availability, increasing prices generally reduces consumer surplus, and reducing competition tends to harm efficiency and innovation.
4. Connect the idea that new goods or services expand the choice set for consumers, allowing them to achieve higher utility or satisfaction.
5. Conclude that value is created primarily through satisfying previously unmet consumer needs or wants, which enhances economic welfare and market efficiency.