A Survey of a Local Market Provided the Following Average

question 66

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. If JCC plans to reduce operating costs by $300,000 after the merger, what will the average cost be for the new firm?

• A) 16.238 percent
• B) 15.00 percent
• C) 17.33 percent
• D) 17.667 percent

---

Definitions:

Import Quota

A government-imposed limit on the quantity of a particular good that can be imported into a country.

French Wines

Wines produced in France, known globally for their quality, variety, and the specific regions in which they are produced, like Bordeaux, Champagne, and Burgundy.

American Wine

Wine produced in the United States, known for its diverse varieties and production regions like Napa and Sonoma.

Import Quota

A governmental policy that sets a physical limit on the quantity of a specific good that can be imported into a country over a given time period.