Final answer:
The primary consequence of poorly designed products driving up costs is reduced production efficiency, as additional resources are spent on repairs, modifications, and managing defects or returns.
Step-by-step explanation:
The primary consequence of "Prod. Risk: Poorly designed products driving up costs" is B) Reduced production efficiency. This can occur because poorly designed products may require more frequent repairs or modifications, leading to increased labor and material costs. Additionally, such products might lead to a higher defect rate or returns from customers, further increasing expenses and reducing overall efficiency in production processes. When the competition offers better or cheaper products, firms with inferior products may face decreased profitability, potentially affecting their longevity in the marketplace. In contrast, consumers benefit from the increased productivity, enjoying a wider selection of affordable and higher-quality goods. Firms are inclined to adjust their production technology when facing increased costs for inputs, which is also a factor that affects production efficiency.