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An entrepreneur prices below cost to force competitors out of the market. What is the main risk?

Answer and explanation

Correct answer: The business itself may suffer unsustainable losses

Selling below cost means each unit may create a loss unless another reliable source covers the gap. A prolonged price war can drain cash, weaken operations, and damage the entrepreneur’s own business before competitors leave. Customers may also switch when prices change later. Therefore the central risk is unsustainable loss, not guaranteed profit or loyalty. A is correct.

Related tags

Below-Cost-PricingCompetitionIntroduction To EntrepreneurshipEntrepreneurial Skills IArtificial IntelligenceClass 9 Mcq

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