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.

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Definitions:

Overt Racism

Describes explicit and visible acts of discrimination or prejudice based on race.

Informal Racism

Subtle or indirect racial discrimination that occurs in daily interactions rather than through explicit laws or policies.

Discriminatory Laws

Legislation that makes distinctions among people based on race, gender, religion, or other arbitrary characteristics, often leading to unfair treatment or disadvantages.

Mid-1900s

Refers to the period from 1950 to 1959, encompassing the middle decade of the 20th century.