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Kate, do you like shopping at Namdaemun Market?

-Yeah, I think it's great. The prices are low, and it's always lively. It's fun to shop there.
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What does 'it' refer to in 'It's always lively'?

Does it mean 'Namdaemun Market'?

1. Namdaemun Market is always lively.
2. __________ is always lively.

Right. It refers to the Namdaemun Market.

I'd say #1, yes.

In the sentence, "It's always lively," the word 'it' does indeed refer to Namdaemun Market. To complete the second sentence, you can say, "Namdaemun Market is always lively." By substituting the blank space with 'Namdaemun Market,' you maintain the meaning of the original sentence.