Question

Identify whether or not the following scenario describes a competitive market, along with the correct explanation of why or why not.

Several stores in the mall sell hooded sweatshirts. Each store's sweatshirts reflect the style of that particular store. Additionally, some makers use higher-quality cotton than others, which is reflected in the apparel's prices.

Answer 1

Not Perfect Competition , Monopolistic Competition

Step-by-step explanation:

Perfect Competition is a market form, where large no. of firms sell homogenous products at uniform prices.

Monopolistically Competition is a market form, where many sellers sell slightly differentiated products (imperfect substitutes of each other), at non uniform but related price levels (due to competition)

Mall Hooded Sweatshirt markets : has several stores, each store's sweatshirts have their particular differentiated theme, cotton quality is variant for different stores. So, different prices are also reflected in different quality of sweatshirts. Hence, differentiated brand image, differentiated prices - imply it is a Monopolistic Competition market (not perfect competition)