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An entrepreneur increases production after seeing product popularity but does not check whether sales were caused by a promotional discount. What error occurred?

Answer and explanation

Correct answer: Treating temporary sales as permanent demand

A promotional discount can create a temporary increase in purchases because customers are responding to the lower price, not necessarily developing lasting demand. Before expanding production, the entrepreneur should compare sales after the offer, repeat purchases, customer feedback, and normal-price demand. Treating the promotion-driven spike as permanent can create excess inventory and waste. A is correct.

Related tags

Temporary-DemandPromotionIntroduction To EntrepreneurshipEntrepreneurial Skills IArtificial IntelligenceClass 9 Mcq

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