14. Assume a commercial bank is producing lending services to a corporate client. Suppose that the total operating costs of producing these services is $50,000 for a loan sum of $10 million. Such costs include information collection and monitoring as well as account maintenance and processing. An investment bank is selling commercial paper to the same corporate client. The investment bank's total cost of running the commercial paper operation is $10,000 for a $1 million issue. These costs include the cost of underwriting the issue as well as sales and trading. a) What is the AC of the commercial bank? b) What is the AC of the investment bank? c) What is the TAC of separately producing the loan services through the commercialbank and the commercial paper issuance through the investment bank? 1

14. Assume a commercial bank is producing lending services to a corporate client. Suppose that the total operating costs of producing these services is $50,000 for a loan sum of $10 million. Such costs include information collection and monitoring as well as account maintenance and processing. An investment bank is selling commercial paper to the same corporate client. The investment bank's total cost of running the commercial paper operation is $10,000 for a $1 million issue. These costs include the cost of underwriting the issue as well as sales and trading. a) What is the AC of the commercial bank? b) What is the AC of the investment bank? c) What is the TAC of separately producing the loan services through the commercialbank and the commercial paper issuance through the investment bank