FAQ UNIT 1:

1. Is profit making the sole objective of an organization? To make profits is the primary motive of an organization, but there are other objectives like maximizing shareholder wealth, social objectives, Human Resource objective like being the best employer, marketing objective to be the market leader and so on. 2. What are the basic questions to be resolved by a firm? The basic problems of what to produce, where to produce, for whom to produce, how to produce, how much to produce and how to distribute them in the market are to be answered by a firm. 3. What does theory of production refer to? Theory of Production refers to conversion of inputs into outputs. The physical production deals with how output is to be produced by a firm by employing different factor inputs in proper proportions. Maximization of output is one of the basic goals of a firm. Production analysis deals with production function, laws of returns, returns to scale, economies of scale, etc. 4. Why is it important to study costs of production? Cost controls, cost reduction, cost cutting and cost minimization receive top most priority in production and cost analysis. Maximization of output with minimum cost is the basic slogan of any firm. Cost analysis deals with the study of various cost concepts, their classification, cost-output relationship in the short run and long run. 5. What do you understand by market structures? The number of sellers and buyers, the nature, extent and degree of competition etc determines the market structure a firm operates in. 6. What is strategic planning? It provides a framework on which long term decisions can be made which have an impact on the behavior of the firm. The firm sets certain long-term goals and objectives and selects the strategy to achieve the same. 7. What is the basic aim of decision making? The basic aim of taking a decision is to select the best course of action which maximizes the economic benefits and minimizes the use of scarce resources of a firm.