The Following Information Is Available on the Average Costs of the Three

question 20

Multiple Choice

The following information is available on the average costs of the three major banks in a given local market.Bank A has assets of $10 million and average costs are 15 percent, Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent.Average costs are measured as a proportion of total assets. Bank B plans to acquire Bank A and in the process cut costs by $100,000.What is the combined bank's average costs?

• A)12.00 percent.
• B)12.67 percent.
• C)13.00 percent.
• D)13.33 percent.
• E)15.00 percent.

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Definitions:

Free Trade

A policy wherein a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports).

Tariffs

Government levies on goods brought into the country.

Import Quotas

Import Quotas are government-imposed limits on the quantity or value of goods that can be imported into a country, typically used to protect domestic industries and control trade balances.

Acquired Comparative Advantage

An advantage a country develops over time in producing certain goods or services, often through investment in education, infrastructure, or technology.