A Survey of a Local Market Provided the Following Average

question 3

Multiple Choice

A survey of a local market provided the following average cost data: Johnson Construction Corp. (JCC) has assets of $5 million and an average cost of 15 percent; Anderson Architects (AA) has assets of $8 million and an average cost of 20 percent; Cole Home Builders (CHB) has assets of $8 million and an average cost of 17 percent. For each firm, average costs are measured as a proportion of assets. JCC is planning to acquire AA and CHB with the expectation of reducing overall average costs by eliminating the duplication of services. What should be the average cost after the acquisition for JCC to justify this merger?

• A) 17.667 percent or lower
• B) 17.667 percent or higher
• C) 17.333 percent or lower
• D) 15.00 percent or lower

---

Definitions:

Grave's Disease

An autoimmune disorder that results in the overproduction of thyroid hormones, leading to symptoms such as weight loss, rapid heartbeat, and nervousness.

Clozapine

An antipsychotic medication used to treat schizophrenia when other treatments have failed, known for its potential to cause agranulocytosis.