What problem may occur if an entrepreneur overestimates demand?
Answer and explanation
Correct answer: Overproduction, unsold stock, and blocked money
Overestimating demand may lead the entrepreneur to produce more goods than customers actually want. Unsold stock then occupies space, may become obsolete, and ties up money that could have been used elsewhere. Options B, C, and D are not automatic results of a high estimate; sales and profit still require real customers.
Frequently asked questions
What is the correct answer to this question?
Overproduction, unsold stock, and blocked money
Why is this the correct answer?
Overestimating demand may lead the entrepreneur to produce more goods than customers actually want. Unsold stock then occupies space, may become obsolete, and ties up money that could have been used elsewhere. Options B, C, and D are not automatic results of a high estimate; sales and profit still require real customers.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
