Which of the following are true of smaller firms?

Question

Multiple select question.

They can be at a disadvantage because the cost of producing less units is higher.

They are likely to have larger sales forces and production facilities.

They are often handicapped with large special-purpose facilities.

They can have the advantage of flexibility

Answer 1

The following statements are true of smaller firms:

1. They can be at a disadvantage because the cost of producing less units is higher. - Smaller firms may experience higher per-unit costs due to economies of scale, which can disadvantage them compared to larger competitors.

2. They can have the advantage of flexibility. - Smaller firms often have the ability to adapt and respond quickly to changes in the market or customer needs, providing them with a competitive edge in terms of flexibility.

The other statements are generally not true for smaller firms:

2. They are likely to have larger sales forces and production facilities. - This statement is more characteristic of larger firms, as smaller firms typically operate with fewer resources.

3. They are often handicapped with large special-purpose facilities. - Smaller firms usually do not have large, specialized facilities as they may not have the capital or demand to support such investments.