Cost function for savings and loan industry, Microeconomics

Assignment Help:

Cost Function for Savings and Loan Industry

* The empirical estimation of long run cost function can be useful in restructuring of the savings and loan industry in wake of savings and loan collapse in 1980s.

* Data for 86 savings and loans for 1975 & 1976 in six western states

- Q = total assets of each S&L

- LAC = average operating expense

- Q & TC are calculated in hundreds of millions of dollars

- Average operating cost is calculated as a percentage of total assets.

*  A quadratic long run average cost function was estimated for the year 1975:

171_cost function for saving and loan industry.png

Minimum long run average cost reaches its point of minimum average the total cost when total assets of savings and loan reach $574 million.

* Average operating expenses are 0.61% of total assets.

* Almost all savings and loans in region being studied had substantially below $574 million in assets.

* Questions

 1)  What are implications of analysis for expansion and mergers?

 2)  What are limitations of using these results?


Related Discussions:- Cost function for savings and loan industry

Development administration, Development Administration: Since the Gove...

Development Administration: Since the Government has been entrusted to manage economic and business activities, it was found difficult to manage the economic policy with the t

Essay short writing only 350 words, What aspects of amino acid structure ar...

What aspects of amino acid structure are involved in the formation and stabilisation of beta-sheets in proteins?

Unemployment, causes and effect of the unemployment

causes and effect of the unemployment

Consumer behaviour, identify three factors to criticize the theory of consu...

identify three factors to criticize the theory of consumer behavior or utility theory

Trade, What are the basis for International Trade?

What are the basis for International Trade?

Consumer behaviour, do you think that dimnishing returns to a factor are co...

do you think that dimnishing returns to a factor are consistent with increasing returns to scale? explain with suitable diagram and reasoning.

Explain how automatic stabilisers help to lower fluctuations, Explain how a...

Explain how automatic (fiscal) stabilisers may help to lower fluctuations in the business cycle. Definition of automatic stabilisers as built-in to the system in terms of trans

Wages and labor supply: equivalent to the utility , Labor cannot be divided...

Labor cannot be divided from the human being who provides it.  The result of the inseparability of labor from the people who gives it, is that the wage for the last hour worked mus

Market Structures, Using the key distinguishing features of any market stru...

Using the key distinguishing features of any market structure describe the market structure for the South African mobile telecommunications industry

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd