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

question 63

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 per cent, Bank B has assets of $20 million and average costs of 13 per cent while Bank C has assets of $30 million with average costs of 12 per cent. Average costs are measured as a proportion of total assets. The above figures indicate that:

• A) there are significant economies of scale still present in the local markets.
• B) there are significant diseconomies of scale still present in the local markets.
• C) there are significant economies of scope still present in the local markets.
• D) there are significant diseconomies of scope still present in the local markets.

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Definitions:

Distribution Networks

Systems of intermediaries and channels a company uses to get a product from the manufacturer to the end consumer.

Global Distribution

involves the process of making a product or service available for consumption in multiple countries around the world through a systematic logistic network.

Local Needs

The specific requirements and preferences of a community or market, which can vary significantly based on cultural, economic, and geographical factors.

Global Advertising

Global advertising involves planning and executing advertising campaigns that transcend national boundaries, aiming to reach consumers in multiple countries through standardized or slightly adapted marketing messages.