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

question 32

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 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.
• E)there is not enough information to determine economies of scale or scopE.

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Definitions:

Rent Payment

The act of paying a specified sum, usually periodically, by a tenant to a landlord in return for the right to occupy or use the property of the landlord.

Tenancy for Years

A lease agreement for real estate that lasts for a specific, fixed duration, longer than one year.

Periodic Tenancy

A leasing agreement that continues for successive periods (such as month-to-month or year-to-year) until either the tenant or landlord gives notice to terminate.

Tenancy at Will

A rental agreement that either party can terminate at any time without cause, provided proper notice is given.