MCAT® ExamCritical Analysis and Reasoning SkillsHard
A city council is debating whether to fund a new public park. One council member argues that since the city already has several parks, and the existing ones are not always at full capacity, there is no real 'need' for another. This argument, by focusing solely on existing capacity rather than potential new demand or alternative benefits, might be overlooking which aspect of urban planning?
- AOpportunity Cost
- BMarginal Utility
- CEconomies of Scale
- DLatent Demand
Show answer & explanationAnswer & explanation
Correct answer: D. Latent Demand
Latent demand refers to a desire for something that is not expressed or satisfied due to a lack of available options or infrastructure. The council member's argument overlooks that a new park might create its own demand or fulfill needs not met by existing parks, which is the essence of latent demand.
Why the other options are wrong
- A. Opportunity cost is the value of the next best alternative foregone, which is a factor in decision-making but not the specific oversight described.
- B. Marginal utility is the additional satisfaction from consuming one more unit, which is related to demand but doesn't capture the 'unexpressed need' aspect as well as latent demand.
- C. Economies of scale relate to cost advantages from increased production, which is not relevant to the argument about park 'need' here.
Latent Demand
Latent demand is a state where consumers have a strong desire for a good or service, but it cannot be satisfied because the product or service does not exist or is not readily available.
- Represents an unexpressed or unmet need.
- Often becomes apparent when new options are introduced.
- Important in market research and urban planning.
Memory trick: Hidden Needs Emerge When Options Appear Indeed.