Question

Bright Bulbs Pvt. Ltd., is manufacturing good quality LED bulbs and catering to the local market. The current production of the company is 1,000 bulbs a day. Anita, the marketing manager of the company, surveyed the market and decided to supply the bulbs to five-star-hotels also. She anticipated the higher demand in future and decided to buy a sophisticated machine to further improve the quality and quantity of the bulbs produced. Which factor affected the fixed capital requirements of the company?

Options

• Scale of Operations

• Growth Prospects

• Diversification

• Choice of Techniques

Answer 1

Growth Prospects

Explanation -

Companies that are expanding and have a greater growth plan demand more fixed capital because in order to expand, they must increase their production capacity, which requires more plant and machinery, which requires more fixed capital.