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An entrepreneur chooses the most expensive of three suppliers because it provides timely delivery and consistent quality. When is this decision justified?

Answer and explanation

Correct answer: When reliability reduces the total cost of delays and defects

Supplier choice should consider total cost, not only the invoice price. A reliable supplier may prevent production stoppages, rejected materials, urgent transport, missed deliveries, and customer compensation. If those avoided costs exceed the price difference, the expensive supplier is economically justified. The decision should still be supported by evidence about performance, so A is correct.

Related tags

Supplier-SelectionTotal-CostIntroduction To EntrepreneurshipEntrepreneurial Skills IArtificial IntelligenceClass 9 Mcq

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