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What should an entrepreneur do first when raw-material prices suddenly increase?

Answer and explanation

Correct answer: Assess the impact on cost and price

A raw-material price increase changes production cost, but its actual effect depends on inventory, quantity, alternatives, demand, and competitor prices. The entrepreneur should first calculate the impact and then examine suppliers, efficiency, product changes, or a justified price revision. Immediate shutdown or arbitrary price doubling may create greater problems. Therefore, A is the proper first step.

Related tags

Cost-AnalysisPricing-DecisionWorking CapitalFinancial ManagementBusiness StudiesClass 12 Mcq

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