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Why is it important for an entrepreneur to know the customer's ability to pay?

Answer and explanation

Correct answer: To decide proper price and correct customer segment

Ability to pay helps the entrepreneur judge whether the target customers can afford the proposed price and how price-sensitive they may be. This information supports segment selection, product design, payment terms, and pricing decisions. Price must also cover cost and reflect customer value; affordability alone is not enough. It does not remove demand, change laws, or prevent competition.

Related tags

PricingAffordabilityEntrepreneurship DevelopmentMsme And Business EntrepreneurshipBusiness StudiesClass 11 Mcq

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