Which TWO of the Following Are Sensible Reasons for WRSX

question 8

Multiple Choice

Which TWO of the following are sensible reasons for WRSX to avoid diversifying into new activities beyond its core marketing services?

• A) There are no possibilities for economies of scope.
• B) Research shows that unrelated diversification is negatively co-related with performance.
• C) The potential for synergy is limited as the activities are not related.
• D) Spreading risk across a wide range of activities reduces dependence on one market.

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Definitions:

Peak Efficiency

The maximum point where resources are utilized in the most efficient way possible without wastage.

Maximizing Profits

The process of adjusting production or operations to achieve the highest possible profitability from the business activities.

Perfectly Competitive Firms

Companies operating in a market where no individual firm has the power to influence market prices or product quality, ensuring no barriers to entry or exit.

Demand Curves

Graphs showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.