An electronics company increased production by 20% but sales rose only 5%. Inventory levels doubled.
What is the best inference?
Show answer & explanation
Correct answer: C
Explanation
According to the given scenario:
• Production increased by 20%, but sales rose by only 5%.
• As a result of unsold goods, the company's inventory doubled.
When supply significantly exceeds sales and inventory piles up rapidly, it indicates that the market demand is weak or failing to match expectations. Hence, the most logical inference is that demand is falling.
Therefore, (C) is the correct answer.