Calculation of Average Costs with Economies of Scope Jewelry Designs

question 69

Multiple Choice

Calculation of Average Costs with Economies of Scope Jewelry Designs is considering a merger with Beads Supply Stores.Jewelry's total operating costs of producing services are $300,000 for sales volume of $2 million.Beads' total operating costs of producing services are $125,000 for a sales volume (J_P) of $2.25 million.For a sales volume of $4.25 million,calculate the reduction in production costs the merged firms need to experience such that the total average cost (TAC) for the merged firms is equal to 8 percent.

• A)Decrease of $340,000
• B)Decrease of $85,000
• C)Decrease of $40,000
• D)Decrease of $25,000

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Definitions:

Causal Relationships

A connection between two variables where a change in one directly causes a change in the other.

Dispositional Variables

Traits and characteristics that individuals bring to different situations, influencing their behavior and reactions.

Correlational Methods

Research techniques that study the relationship between two or more variables without determining cause and effect.

Experimental Methods

Research strategies involving the manipulation of one variable to determine its effect on another variable, within a controlled environment, to establish cause-and-effect relationships.