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

question 41

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 percent,Bank B has assets of $20 million and average costs of 13 percent while Bank C has assets of $30 million with average costs of 12 percent.Average costs are measured as a proportion of total assets.

The above values 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:

Consumer

An individual or group that purchases goods or services for personal use.

Perceived Budget Line

A graphical representation of all possible combinations of goods that a consumer can purchase with a given budget, based on their perception of available resources.

Equilibrium

A state in which economic forces such as supply and demand are balanced and in the absence of external influences, the values of economic variables will not change.

Investor

A person or organization that invests money anticipating a return on their investment.