Question

The passage suggests that in order for a manufacturer in a capital-intensive industry to have a decisive advantage over competitors making similar products, the manufacturer must _________

• A. Be the first in the industry to build production facilities of theoretically optimal size.
• B. Make every effort to keep fixed and sunk costs as low as possible.
• C. Be one of the first to operate its manufacturing plants at minimum efficient scale.
• D. Produce goods of higher quality than those produced by direct competitors.
• E. Stockpile raw materials at production sites in order to ensure a steady flow of such materials.

Answer 1

The correct option is C Be one of the first to operate its manufacturing plants at minimum efficient scale.

The given passage talks about the competition faced by manufacturers and how they should cope with it. The answer lies in 4th line of the passage where it says that manufacturers should operate its manufacturing plants at minimum efficient scale which will minimize the cost per unit of output. Thus, option C is the correct answer. Rest of the options are wrong.