Related Factors II

market size

Market size is the number of potential buyers and sellers of a good or service.

Usually, the larger the market size, the higher the demand for goods and services.

Companies that are successful domestically may expand to another country to access more potential buyers.

consumer purchasing power

Consumer purchasing power indicates how much money people have to buy things.

The higher the purchasing power consumers have, the more they can afford.

If consumers in a market have high purchasing power, there is likely to be higher demand for goods and services.

consumer preferences

Consumer preferences reflect how consumers feel about a good or service.

When there is a change in consumer preferences, there will be a change in demand.

For example, if a fashion brand becomes popular, there will be higher demand for it.

Questions

What usually happens to demand as the size of a market grows?

> it increases

When consumers in a target market have higher purchasing power,...

>demand is likely to increase.

What will happen if a style of clothing becomes more pupular among consumers?

>the demand for it will increase.

Many Canadian companies expand their business to the United States to access more potential buyers.

Market size is the number of potential buyers and sellers of a good or service.

The lower the purchasing power consumers have , the less money they are likely to spend on goods they don't need, like luxury items.

The higher the purchasing power consumers have, the more money they are willing to spend on goods they want.

Advertisers try to influence consumer preferences to create more demand for a good or service.

The demand for a product will increase or decrease depending on consumer preferences.

Sugary drinks are becoming less popular among consumers, so the demand for soda has decreased.

complementary goods

Complementary goods are goods that are usually used together, such as cars and gasoline.

If the price of a product is increased, the demand for its complementary goods is likely to decrease.

For example, if the price of gasoline increases, there will probably be a lower demand for gasoline cars.

substitute goods

Substitute goods are products that fulfill the same consumer need.

When the price of a product goes up, the demand for its substitutes is likely to increase.

If one brand of toothpaste becomes more expensive, demand for other brands is likely to rise.

Questions

Which of the following is an example of complementary goods?

>cars and gasoline.

When the price of a product goes up, what may happen to the demand for its substitute goods?

>it will go up.

If a company raises the price of its products, the demand for its competitors may increase.

If one product is seen as meeting the same needs as another, they are substitute goods.

Substitute goods satisfy the same consumer needs and may replace one another.

If the price of a product decreases and its demand increase, demand for its complementary good will also increase.