Why is it important for an entrepreneur to know the customer's ability to pay?
Answer and explanation
Correct answer: To decide proper price and correct customer segment
Ability to pay helps the entrepreneur judge whether the target customers can afford the proposed price and how price-sensitive they may be. This information supports segment selection, product design, payment terms, and pricing decisions. Price must also cover cost and reflect customer value; affordability alone is not enough. It does not remove demand, change laws, or prevent competition.
Frequently asked questions
What is the correct answer to this question?
To decide proper price and correct customer segment
Why is this the correct answer?
Ability to pay helps the entrepreneur judge whether the target customers can afford the proposed price and how price-sensitive they may be. This information supports segment selection, product design, payment terms, and pricing decisions. Price must also cover cost and reflect customer value; affordability alone is not enough. It does not remove demand, change laws, or prevent competition.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: MSME and Business Entrepreneurship. Topic: Entrepreneurship Development.
