(2) An economics illiterate friend of yours with great technicalknowledge in space exploration wishes to start a new company in herarea of expertise. After reading a do-it-yourself entrepreneurmanual she finds out that the basic blueprint for a company’sprofitability and survival involves three elements.

(A) Find a starting niche from which the firm canexpand.

(B) Produce the product at scale

(C) Create a sales-and-distribution network (3%)

Which of the following statements provides the economicrationale for which stage in the above sequence?

1. Minimisation of fixed costs of production
2. Gaining access to stock exchange finance
3. Exploitation of monopoly power to earn economic profits
4. Reduction of average cost of production
5. Securing long-run lease for the premises of the company
6. Obtaining government subsidies
7. Reduction of transaction costs
8. Minimisation of profit tax