George's Dry Cleaning Is Considering a Merger with Weezzie's Laundry

question 73

Multiple Choice

George's Dry Cleaning is considering a merger with Weezzie's Laundry Supply Stores. George's total operating costs of producing services are $590,000 for sales volume (SG) of $4.7 million. Weezzie's total operating costs of producing services are $152,000 for a sales volume (SW) of $2.3 million. For a sales volume of $7 million, calculate the reduction in production costs the merged firms need to experience such that the total average cost (TAC) for the merged firms is equal to 9 percent.

• A) $97,000
• B) $101,000
• C) $112,000
• D) $128,000

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Definitions:

Mexico and Canada

Two countries located in North America, with Mexico in the south and Canada in the north, both sharing borders with the United States.

Genetic Drift

A random change in allele frequency in a small breeding population.

Genetic Bottleneck

A sharp reduction in the size of a population due to environmental events or human activities, which leads to a decrease in genetic diversity.

Founder Effect

Genetic drift that results from a small population colonizing a new area.