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Efficiency and operating costs are closely related in various contexts, especially in business and engineering. Here’s a breakdown of their relationship:
1. Definition of Efficiency: Efficiency refers to the ratio of useful output to total input in a system. In a business context, it indicates how well resources are utilized to produce goods or services.
2. Impact on Operating Costs: Higher efficiency usually leads to lower operating costs. When a system or process operates efficiently, it requires less energy, labor, and materials to achieve the same output, thus reducing overall expenses.
3. Energy Consumption: In industries where energy costs are significant, improving efficiency (e.g., through better machinery or processes) can lead directly to lower energy bills.
4. Labor Costs: Efficient processes can reduce the time and workforce required to produce a product, thus lowering labor costs.
5. Material Utilization: Efficient use of materials can minimize waste, leading to cost savings in purchasing and disposal.
6. Long-term Savings: While initial investments in efficiency improvements may be high (like upgrading equipment), the long-term reduction in operating costs can justify these expenses.
7. Overall Profitability: Companies that focus on efficiency may enhance their profitability by reducing costs while maintaining or increasing output levels.
In summary, there is a direct correlation where improved efficiency leads to reduced operating costs, ultimately benefiting the financial performance of an organization.
Efficiency and operating costs are closely related concepts in business and industry. Efficiency refers to the ability to accomplish a task or produce a product with minimal waste of resources, including time, capital, and materials. When a system or process is more efficient, it typically requires fewer resources to produce the same output.
As efficiency increases, operating costs often decrease. This is because efficient operations optimize the use of resources, reduce waste, and lower the time spent on production processes. For example, a manufacturing plant that operates efficiently may use less energy and labor to produce goods, resulting in lower utility bills and payroll costs.
Conversely, if a process is inefficient, it may incur higher operating costs due to increased waste, longer production times, and more resources needed to achieve the same result. Therefore, improving efficiency is a common strategy for organizations aiming to reduce operating costs and improve profitability.
In summary, there is an inverse relationship between efficiency and operating costs: as efficiency improves, operating costs generally decline, leading to greater overall profitability.
Answer: c
Explanation: Efficiency is one of the limitations in the design of the machines. The
efficiency should be as high as possible to reduce the initial cost.