Zenith Corp., a bag company, produced a lot of high-end leather bags than could be sold in the market for a year. The leather bags eventually wore out and were not fit to be sold, thus causing huge losses for that year. Which of the following did Zenith Corp. most probably experience during that year?
A)Use of full production capacity
B)Unused production capacity
C)High exit barriers
D)Special sales incentives

Question

Quizplus · Accepted Answer

Zenith Corp. likely used its full production capacity to produce a large quantity of leather bags, more than the market demand, leading to unsold inventory and eventual losses.