Which of the Following Is Consistent with Economies of Scope

question 108

Multiple Choice

Which of the following is consistent with economies of scope? The subscript "b" refers to a banking firm,"s" for a securities firm,"AC" is average costs and "TC" is total costs.

• A)AC_{b + s} > AC_b + AC_s.
• B)AC_{b + s} = AC_b + AC_s.
• C)AC_{b + s} < AC_b + AC_s.
• D)TC_{b + s} < TC_b + TC_s.

---

Definitions:

Interest Expense

This is the cost incurred by an entity for borrowed funds over a period of time.

Bondholder Claims

The rights that bondholders have to the issuer's assets and income, usually in the form of interest payments and the return of principal at maturity.

Corporation Assets

Corporation assets are all owned resources of a corporation, including tangible and intangible items, that have value and can be used to produce goods or services.

Stockholders

Individuals or entities that own stock in a corporation, giving them ownership interests and rights such as voting on corporate matters.