Question

O False Question 5 4 pts Economies of scale: O are achieved when a firm reduces its average unit cost of production as it produces more O can be avoided by purchasing supplies and raw materials in large quantities. O help explain the success of small businesses are available to small firms but not to large firms, due to management inefficiencies OS

Answer 1

5) Economies of scale are achieved when a firm reduces its average cost of production as it produces more.

Fixed costs (eg rent) which do not change with the level of output, can be spread across more number of units if the production is enhanced.The cost per unit thus becomes lower. It can be achieved in variable costs also, since for producing a higher quantity, will require more raw materials. The firm may enhance its bargaining power in terms of higher discounts on bulk purchases.

6) A mission statement reflects the fundamental purposes of an organisation and serves as the guiding document for management planning and decision making. It answers the question-"What business are we in.?"

A mission statement defines the goals and objectives of a company. It defines what a company does for its various stakeholders (i.e. customers, employees, owners, society, etc).It defines the purpose and existence of the company.