Calculation of Average Costs with Economies of Scope Baby Supplies

question 1

Multiple Choice

Calculation of Average Costs with Economies of Scope Baby Supplies is considering a merger with Tot Toy Stores.Baby's total operating costs of producing services are $450,000 for sales volume of $2.15 million.Tot's total operating costs of producing services are $250,000 for a sales volume (J_P) of $975,000.For a sales volume of $3.125 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 19.5 percent.

• A)Decrease of $609,375
• B)Decrease of $90,625
• C)Decrease of $9,375
• D)Decrease of $159,375

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Definitions:

Mental Alertness

The state of being fully awake and aware, capable of quickly understanding and responding to external stimuli or situations.

Sleep Deprivation

Sleep deprivation occurs when an individual fails to get enough sleep. It can negatively affect multiple aspects of mental and physical health, including mood, cognitive abilities, and overall well-being.

Dependent Variable

The variable in a study or experiment that is expected to change as a result of manipulations of the independent variable.

Alcoholic Beverage

A drink containing ethanol, commonly known as alcohol, which is psychoactive and consumed for its intoxicating effects.