Understanding how income is distributed within and across populations informs firms of different groups purchasing power.
This is further explained below.
<h3>What is
purchasing power.?</h3>
Generally, The buying power of a certain currency is defined as the number of goods and services that can be acquired by spending a specific amount of that money.
For illustration purposes, in the 1950s, if one went to a store with one unit of cash, they would have been able to buy whatever was on the shelf.
Income: money that is earned, often on a regular basis, as a direct or indirect consequence of one's job or investing activities.
In conclusion, Firms need to have an understanding of the distribution of income both within populations and between populations in order to determine the buying power of various groups.
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