How should you answer if during a phone interview you are asked if you have offers or interviews lined up with other companies?

I was asked if I have interviews or job offers and I answered honestly and said yes I have a job offer and I have one interview lined up. The interviewer then asked if I have to respond soon and I said not too soon, about a week. Why do they even ask if you have been applying to other companies? Why do they ask if you have interviews? Did I answer incorrectly?

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