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If an entrepreneur produces too much without estimating demand, what is the main risk?

Answer and explanation

Correct answer: Unsold stock and blocked money

Producing beyond likely demand can leave goods unsold. Money then remains tied up in inventory, storage costs may rise, products may become outdated or damaged, and cash may not be available for wages or new materials. Demand estimation through research, pilot sales, and records helps decide a more suitable production level. Excess production does not guarantee profit or customer trust.

Related tags

Demand-EstimationInventory-RiskBusiness RiskBusinessTrade And CommerceBusiness Trade And CommerceBusiness StudiesClass 11 Mcq

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