If an entrepreneur buys too much stock without knowing the demand, which risk increases?
Answer and explanation
Correct answer: The risk of money being blocked and stock remaining unsold
Buying stock without estimating demand can create inventory and financial risk. The entrepreneur’s money becomes tied up in goods, storage costs may rise, and unsold products may become outdated, damaged, or difficult to sell. The purchase does not automatically improve quality or guarantee profit. Customer knowledge is unrelated to excess stock, so option A is the only valid consequence.
Frequently asked questions
What is the correct answer to this question?
The risk of money being blocked and stock remaining unsold
Why is this the correct answer?
Buying stock without estimating demand can create inventory and financial risk. The entrepreneur’s money becomes tied up in goods, storage costs may rise, and unsold products may become outdated, damaged, or difficult to sell. The purchase does not automatically improve quality or guarantee profit. Customer knowledge is unrelated to excess stock, so option A is the only valid consequence.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
