What type of market is characterized by high demand and limited supply?

What type of market is characterized by high demand and limited supply?

• A. Buyer's market
• B. Seller's market
• C. Neutral market
• D. Bubble market

Answer: (B)

A seller's market is characterized by high demand and limited supply, which is the correct context for this scenario. In a seller's market, the demand from buyers exceeds the availability of properties, leading to increased competition among buyers. This often results in higher prices and quicker sales, as buyers may be willing to offer more or act faster to secure a property before it is sold to someone else. In contrast, a buyer's market occurs when there is an oversupply of properties compared to the demand, allowing buyers to have more negotiating power and potentially lower prices. A neutral market reflects a balance between supply and demand, where prices remain stable. A bubble market describes a situation where prices are driven up beyond their intrinsic value, often fueled by speculation, rather than just supply and demand dynamics.

A seller's market is characterized by high demand and limited supply, which is the correct context for this scenario. In a seller's market, the demand from buyers exceeds the availability of properties, leading to increased competition among buyers. This often results in higher prices and quicker sales, as buyers may be willing to offer more or act faster to secure a property before it is sold to someone else.

In contrast, a buyer's market occurs when there is an oversupply of properties compared to the demand, allowing buyers to have more negotiating power and potentially lower prices. A neutral market reflects a balance between supply and demand, where prices remain stable. A bubble market describes a situation where prices are driven up beyond their intrinsic value, often fueled by speculation, rather than just supply and demand dynamics.