Calculation of Average Costs with Economies of Scope Baby Supplies

question 88

Multiple Choice

Calculation of Average Costs with Economies of Scope Baby Supplies is considering a merger with Tot Toy Stores. Baby's total operating costs of producing services are $450,000 for sales volume of $2.15 million. Tot's total operating costs of producing services are $250,000 for a sales volume (J_P) of $975,000. Calculate the average cost of production for the Baby and Tot Toy firms, respectively.

• A) 11.63%, 20.93%
• B) 20.93%, 25.64%
• C) 46.15%, 11.63%
• D) 22.4%, 22.4%

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Definitions:

Goods Imports

The act of bringing in goods and services from a foreign country for trade or sale within a domestic market.

Net Investment Income

The profit from investments after deducting all related expenses, such as interest payments and fees.

Purchases of Assets

The acquisition of assets, such as property, equipment, or securities, by a company or individual as investments or for production purposes.

Inflows of Money

The movement of cash or cash equivalents into a place, organization, or financial instrument.