Jan's Bakery Is Considering a Merger with Tina's Cookies

question 27

Multiple Choice

Jan's Bakery is considering a merger with Tina's Cookies. Jan's total operating costs of producing services are $300,000 for a sales volume of $2 million. Tina's total operating costs of producing services are $75,000 for a sales volume of $600,000. If the two firms merge, calculate the total average cost for the merged firm assuming no synergies.

• A) 12.5 percent
• B) 11.54 percent
• C) 14.42 percent
• D) 13.75 percent

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Definitions:

Garbage Collector

An individual or entity responsible for collecting and disposing of waste material from public or designated areas.

Relatively Higher

A comparative term indicating that one variable or item is of greater magnitude or intensity compared to another or the general context.

Competitive Industry

An industry characterized by many sellers, where no single company can control market prices.

Barriers To Entry

Factors that prevent or hinder companies from entering a particular market or industry.