If the expenses for producing an item are more than what you can sell it for you will experience a

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Business

Kaelyn Booth

15 May, 08:39

If the expenses for producing an item are more than what you can sell it for you will experience a

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Alfonso Stuart · Answer 1

If the expenses for producing an item are more than what you can sell it for you will experience a loss.

A loss involves more money being spent "going out" compared to the money received or "coming in" from sales. This is negative and potentially threatening for an individual or business's survival. Factors such as loss of market value, market competition and economic recessions can lead to losses.

Kristen Copeland · Answer 2

If the expense to produce an item exceeds the value which the producer can command on the market, then that producer will experience a net loss from selling the item. However, this does not necessarily mean that the producer should not produce, as there are other extenuating factors. For example, if the calculated production cost includes a large amount of fixed costs, then the production of that marginal item may indicate a loss; however continued production would eventually spread the fixed costs sufficiently to yield a net gain. Additionally, producers may wish to sell at a loss for an initial period for reasons such as market entry, product loss, or competitive strategy.