Why can diversity of revenue sources be beneficial in an enterprise?
Answer and explanation
Correct answer: If one source weakens, another may provide support
Relying on only one revenue source makes the enterprise vulnerable if demand, prices, or market conditions change. Different sources can provide a more balanced and stable inflow, although they do not remove all risk. Accounts and customer understanding remain necessary. Thus, option A correctly explains the risk-management benefit of revenue diversification.
Frequently asked questions
What is the correct answer to this question?
If one source weakens, another may provide support
Why is this the correct answer?
Relying on only one revenue source makes the enterprise vulnerable if demand, prices, or market conditions change. Different sources can provide a more balanced and stable inflow, although they do not remove all risk. Accounts and customer understanding remain necessary. Thus, option A correctly explains the risk-management benefit of revenue diversification.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: MSME and Business Entrepreneurship. Topic: Entrepreneurship Development.
