Economies of Scope a Survey of a Local Market Provided

question 82

Multiple Choice

Economies of Scope A survey of a local market provided the following average cost data: Johnson Construction Corp.(JCC) has assets of $5 million and an average cost of 15 percent; Anderson Architects (AA) has assets of $8 million and an average cost of 20 percent; Cole Home Builders (CHB) has assets of $8 million and an average cost of 17 percent.For each firm,average costs are measured as a proportion of assets.JCC is planning to acquire AA and CHB with the expectation of reducing overall average costs by eliminating the duplication of services.
What should be the average cost after the acquisition for JCC to justify this merger?

• A)17.667 percent or lower
• B)17.667 percent or higher
• C)17.333 percent or lower
• D)15.00 percent or lower

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Definitions:

Factitious Disorder

A psychological disorder characterized by the intentional fabrication of illness or injury to assume the sick role without external incentives.

External Gain

Benefits obtained from others or the environment due to one’s behaviors, often discussed in the context of malingering where the gain is used to explain the motivation for symptomatic behavior.

Factitious Disorder

A mental disorder in which an individual deliberately produces or exaggerates symptoms of illness in themselves for the primary purpose of assuming the sick role.

Psychological Need

An intrinsic desire pertinent to achieving mental well-being, such as the need for esteem, belonging, autonomy, and competence.