Market and factors affecting the size of market

Market is a basic and very important concept in micro economics. Usually by market we mean the place where buyers and sellers come to sale and purchase any good. But in economics we define market in a broader sense. “Market is an area where buyers and sellers negotiate about the transaction of a commodity or good”.

If following conditions are fulfilled in an area, then we can say, that area a Market.

  1. The existence of concerned good in finished form.
  2. There should be a contact between buyers and sellers of a good, through communication sources.
  3. Such place can be anywhere such as bazar, town, shop, city, country etc.
  4. Price of the good should be equal in the whole market.

Factors Affecting the Size of Market:

Following are few factors that play very crucial role in the size of market:

Nature of Goods:

The nature of the good plays very important role in the reputation of the market. Better quality of good will increase the quantity of buyers of any good.

Price of Goods:

The price of the goods must be reasonable because higher price of the good will cause the buyer to ignore the good.

Quantity of Good:

The quantity of the good must be more than enough so that there should be no shortage in the market.

Political Conditions:

The political condition and the law in order situation must be stable in the related region.

Banking System:

There should be advanced banking system so that the transaction of a good becomes easier.

Transportation System:

The means of transportation system in the market area must be advanced, so that no problems in mobility of the goods may occur.

Commercial Policy:

Trade with fewer restrictions encourages imports and exports. Such trade activities expands the market.


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