Final answer:
The correct answer is option 3. A drugstore selling a diverse range of products practices scrambled merchandising, which is an expansive retail approach, leading to intertype competition in a monopolistic competition market.
Step-by-step explanation:
A drugstore that sells pharmaceuticals, beauty aids, camera equipment, nonperishable grocery items, and automobile motor oil is an example of a retailer using scrambled merchandising. Scrambled merchandising refers to a retail strategy where a store carries a wide assortment of goods that span different product categories, often including items that are not traditionally related to their primary line of business.
This retail approach contrasts with traditional merchandising, where retailers focus on a more narrow and related line of products. Scrambled merchandising can increase intertype competition, where retailers compete outside of their traditional categories. This kind of competition can lead to a form of market structure known as monopolistic competition, where many firms compete for market share with differentiated products.
As a modern phenomenon, department stores and mail-order catalogs, such as the Sears catalog, have historically exemplified this trend by offering a wide range of products under one roof or in a single catalog. This retail strategy has become a common feature in today's retail environment, where consumers can find an increasingly wide array of goods in a single retail location, indicating a shift in consumerism and acquisition patterns.