Practice Test

Question 11 • Economics

Which scenario is an example of market saturation?

Answer

The single coffee shop in town usually has a long line of customers and tends to stay busy during business hours.

It can be difficult to get reservations at the only upscale Ethiopian restaurant in town, and it is best to call in advance.

There are three shoe stores on one block in town, and they have trouble finding customers and making a profit.

A second health club will open because the only health club in town is too crowded to accept new customers.

Explanation

Market saturation occurs when a market has more businesses or products than customer demand can support. In choice C, three shoe stores are competing on one block and struggling to find customers and make a profit, which indicates the market is saturated. The other scenarios describe businesses with more customer demand than they can currently serve.

AI-written and checked against the verified answer.

More from this Course

Practice Test

Practice Test

Practice Test