Final answer:
The term market density is indeed used to describe the number of potential customers within a unit of land area. It helps businesses assess the concentration of consumers and understand the market potential in a particular area, influencing their operations and planning.
Step-by-step explanation:
The statement is true; the term market density refers to the number of potential customers per unit of land area, such as per square mile. Similar to population density, which calculates the average number of individuals per unit of area, market density focuses more specifically on the concentration of potential consumers within a certain geographic segment. This is a crucial concept for businesses as it helps in determining market potential and the viability of establishing new stores or services in a particular area.
Merchants and service providers assess market density to approximate the potential customer base in a geographic area. For instance, certain businesses have a minimum threshold population necessary to support their operations. This concept of market density can significantly influence business planning and marketing strategies. High market density areas might offer more business opportunities due to a higher number of potential customers.