Question

What negative consequences could result from companies generating more products than they can sell?

Answer 1

Answer:

- The price of that product would eventually fall.

- Bankruptcy

Explanation:

When the companies generate more products that they can sell, they will be forced to stock those products in their warehouse.

The amount that they store will keep increasing until eventually they have to take some sort of measurement to attract consumers' interest. Under such situation, it is very likely they will reduce the price of the product.

If the amount that they sell after reducing the product could cover the cost of operation, the company might still be able to survive to continue the operation. But it couldn't cover the cost of operation, they might've been forced to declare bankruptcy.