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A large city has lots of small shops where people can buy sweaters. Each store's sweaters reflect the style of that particular store. Additionally, some stores use higher-quality yarn than others, which is reflected in their price _________.

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Answer: Please refer to Explanation

Explanation:

I have attached the requirements of the question.

This type of Market is known as a Monopolistic Competitive Market.

In a Monopolistic Competitive Market, there are many firms with each selling similar but differentiated products. These products are sold for a price that take into account, the amount of Differentiation made.

Getting into this market is easy as there are no barriers to entry or exit. A high investment is needed though to differentiate goods and to advertise effectively so it is Challenging.

Number of Firms - Many Firms.

Type of Product - Differentiated

Entry - Challenging

Market model - Monopolistic Competition.

The above situation fits into these criteria so it is a Monopolistic Competitive Market.

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