Question

Is retail industry is monopolistic competition?If it is monopolistic competition what is demand and supply for retail industry?

Answer 1

Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors.

The retail industry is comprised of thousands of different brands and companies. However each is defined by its quality of make and materials used, but if prices were to exceed what people are willing to pay, then the consumers would alter their preferences and buy from another brand. Therefore we are dealing with a monopolistic competition.

Supply and demand represent the most functional model that can be applied in any market. The latter is a combination of buyers and sellers interacting about a particular product or service. In this domain, two notions can be identified the quantity demanded and the quantity supplied. Quantity demanded is the demand volume with respect to a particular price and is represented geographically by a demand curve, whereas the quantity supplied is the amount existing, ‘laying on shelves’ which exposed to sale at given price.