Which of the following is an example of market size affecting demand?
A. Restaurant visits drop after a
causes a city to be evacuated.
B. A computer chip maker moves to a
town and hires hundreds.
C. After a team wins the World Series,
it becomes a fad to buy their caps.
D. Sales of potato chips drop after the
price of pretzels falls by 1/2.
To determine which of the options is an example of market size affecting demand, we need to understand the concept of market size and demand.
Market size refers to the total number of potential buyers for a particular product or service in a given market. Demand, on the other hand, refers to the quantity of a product or service that consumers are willing and able to buy at a given price and within a specific period.
A. "Restaurant visits drop after a disaster causes a city to be evacuated" is an example of a decrease in demand, but it is not directly related to market size. The decrease in demand is due to the temporary absence of consumers, not a change in the overall number of potential buyers in the market.
B. "A computer chip maker moves to a town and hires hundreds" is an example of an increase in market size. When a company moves to a new town and creates job opportunities, it attracts new residents to the area. The additional residents increase the total number of potential buyers in the market, which can in turn lead to an increase in demand for various products and services in the town.
C. "After a team wins the World Series, it becomes a fad to buy their caps" is an example of a change in consumer preferences, rather than market size affecting demand. The demand for the team's caps increases because of the team's success and popularity, but the change in demand is not directly related to the size of the market.
D. "Sales of potato chips drop after the price of pretzels falls by 1/2" is an example of a change in relative prices, rather than market size affecting demand. The decrease in the price of pretzels may lead consumers to switch from buying potato chips to pretzels, resulting in a decrease in demand for potato chips. However, this change is not directly related to the market size.
Based on the above explanation, option B ("A computer chip maker moves to a town and hires hundreds") is the example of market size affecting demand.