Question

The image above shows a departmental store of a market structure.

1. Identify the form of market as observed from the above image.
2. Discuss the features of this market form with respect to:
   1. Type of product
   2. Entry and exit of firms
   3. Selling cost

Answer 1

1. The above graphic depicts a monopolistic market. The department store offers a diverse range of brands and items, demonstrating competition among firms. However, product differentiation gives each firm considerable market power.
2. The features of the monopolistic competition market with respect to the given points:
   1. Type of product: Firms differentiate their products by offering modest variations from competitors. Differentiation can be based on perceived uniqueness, such as quality or brand.
   2. Entry and Exit of firm: The market has low entry and exit barriers, allowing new and current enterprises to enter and quit without major losses. This helps keep the market competitive.
   3. Selling cost: Monopolistic competition requires firms to invest in marketing and advertising to differentiate their products and attract customers. In contrast, perfect competition eliminates the necessity for promotion because all products are the same.