Consider the Following Two FIs: Company a Has $500 Million

question 17

Multiple Choice

Consider the following two FIs: Company A has $500 million in total assets and total costs equal to $200 million. Company B has $60 million in total assets and total costs equal to $24 million
-Assume a third FI (company C) operates in the same market with two FIs, and it has $800 million in assets and total costs of $420 million. What can you conclude about the cost structure of the FIs in this market?

• A) There are significant economies of scale because companies A, B, and C coexist in the industry.
• B) There are no significant economies of scale because both companies A and C are much larger than company B.
• C) There are no significant economies of scale because the unit costs are constant.
• D) There are significant economies of scale beyond the $500 million asset size.
• E) There are no significant economies of scale because the unit costs increase as size increases.

---

Definitions:

Leydig Cells

Cells located in the testes that produce testosterone and other androgens, crucial for male reproductive and secondary sexual characteristics.

Testosterone

A primary male sex hormone that plays key roles in health and well-being, including the development of male sexual characteristics, muscle mass, and bone density.

Rete Testis

A network of tubules in the testes where sperm partially matures and is transported to the epididymis.

Ductus Deferens

A channel responsible for moving sperm from the epididymis to the ejaculatory ducts in the system of male reproduction.