In which situation can an entrepreneur’s risk be reduced?
Answer and explanation
Correct answer: By collecting information and starting small
Market information reduces uncertainty about customers, competitors, costs, and possible obstacles. Starting small allows an entrepreneur to test the idea, learn from results, and limit the size of a possible loss. An unplanned large loan, ignoring customer needs, and keeping no records increase uncertainty and financial exposure. Therefore, option A gives two practical methods of reducing risk.
Frequently asked questions
What is the correct answer to this question?
By collecting information and starting small
Why is this the correct answer?
Market information reduces uncertainty about customers, competitors, costs, and possible obstacles. Starting small allows an entrepreneur to test the idea, learn from results, and limit the size of a possible loss. An unplanned large loan, ignoring customer needs, and keeping no records increase uncertainty and financial exposure. Therefore, option A gives two practical methods of reducing risk.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
