If an entrepreneur produces a large quantity without checking demand, what is the main risk?
Answer and explanation
Correct answer: Risk of unsold stock and blocked money
Production without demand evidence can leave the enterprise with stock that customers do not want or cannot buy quickly. Money becomes tied up in inventory, storage and handling costs may rise, and the business may face spoilage, obsolescence, or discounting. Demand research cannot guarantee sales, but it helps align production with likely purchases. The other options are unsupported automatic outcomes.
Frequently asked questions
What is the correct answer to this question?
Risk of unsold stock and blocked money
Why is this the correct answer?
Production without demand evidence can leave the enterprise with stock that customers do not want or cannot buy quickly. Money becomes tied up in inventory, storage and handling costs may rise, and the business may face spoilage, obsolescence, or discounting. Demand research cannot guarantee sales, but it helps align production with likely purchases. The other options are unsupported automatic outcomes.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
