Question

A manufacturer of washing machines has expanded its plant and created excess capacity, just as the general economy takes a downturn. The company is likely to: a. suffer from intense rivalry from international manufacturers. b. offer rebates and incentives to customers to promote sales. c. be vulnerable to new entrants to an attractive market. d. raise prices on washing machines to offset lost sales.

Answer 1

Answer:

b. offer rebates and incentives to customers to promote sales. 

Explanation:

Due to the increase in excess capacity, there would be an excess supply of washing machines. Because of the economic downturn, sales would fall and the demand for washing machines would fall too.

The supplier would want to sell his washing machines. To do this, he would offer a lot incentives to customers to attract them. Offering rebates and other incentives would attract customers.

If the seller raises prices, the demand for washing machines would fall.

There would be no new entrants to the market due to the economic situation.

I hope my answer helps you