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The economies of scale curve in Figure can be represented algebraically in the equation: Average costs = a + bQ + cQ 2 ; where Q is the quantity produced by a firm, and a, b, and c are coefficients

The economies of scale curve in Figure can be represented algebraically in the equation: Average costs = a + bQ + cQ2; where Q is the quantity produced by a firm, and a, b, and c are coefficients that are estimated from industry data. For example, it has been shown that the economies of scale curve for savings and loan companies in the U.S. is: Average costs = 2.38 - .615A + .54A2, where A is a savings and loan’s total assets. Using this equation, what is the optimal size of a savings and loan?

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Assume the following Savings Loans Assets Bank 1 75 000 000 …View the full answer


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Strategic Management and Competitive Advantage Concepts and Cases

Strategic Management and Competitive Advantage Concepts and Cases

ISBN: 978-0133127409

5th edition

Authors: Jay B. Barney, William Hesterly

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Posted Date: May 08, 2015 02:59:23
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