Suppose a market is divided into two segments: Segment A and Segment B. If Segment A has a higher equilibrium quantity than Segment B, which market segment is larger?

• A. Segment A
• B. Segment B
• C. Both segments are equal in size
• D. Cannot be determined from the information given

Answer: (A)

Verified step by step guidance

1. Understand that the size of a market segment is typically measured by the equilibrium quantity, which represents the amount of goods or services bought and sold in that segment at equilibrium.
2. Recall that equilibrium quantity is determined where the quantity demanded equals the quantity supplied in that segment.
3. Compare the equilibrium quantities of Segment A and Segment B: since Segment A has a higher equilibrium quantity, it means more goods or services are exchanged in Segment A than in Segment B.
4. Conclude that the segment with the higher equilibrium quantity is larger in terms of market size because it reflects greater market activity and consumer participation.
5. Therefore, based on the given information, Segment A is the larger market segment.