An entrepreneur priced a product very low, increasing sales but causing losses. What is the most appropriate correction?
Answer and explanation
Correct answer: Balanced review of cost and price
High sales do not necessarily mean a healthy business. The selling price should cover relevant costs and leave a reasonable margin while remaining acceptable to customers. The entrepreneur should calculate unit cost, examine customer value and competition, and then revise price or reduce avoidable costs. Free distribution, refusing customers, or hiding expenses would worsen the loss.
Frequently asked questions
What is the correct answer to this question?
Balanced review of cost and price
Why is this the correct answer?
High sales do not necessarily mean a healthy business. The selling price should cover relevant costs and leave a reasonable margin while remaining acceptable to customers. The entrepreneur should calculate unit cost, examine customer value and competition, and then revise price or reduce avoidable costs. Free distribution, refusing customers, or hiding expenses would worsen the loss.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: MSME and Business Entrepreneurship. Topic: Entrepreneurship Development.
