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A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C = 312 - 0.006768Q + 0.000005350Q% +
A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C = 312 - 0.006768Q + 0.000005350Q% + 21.1X; (3.12) (2.61) (2.89) (2.96) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ( million) divided by total assets (% million) times 100 percent. @ = output; measured by total assets ($ million) X1 = ratio of the number of branches to total assets ( million) MNote: The number in parentheses below each coefficient is its respective t-statistic. Holding constant the effects of bank branching {(X7), what is the level of total assets that minimizes the average operating expense ratio? O 631.46 million 0 1,558.81 million 0 460.99 million 0 $1,262.92 million What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch? ) 5.63% ) 1.17% O 3.15% ) 1.02% What is the ratio with 10 branches instead? ) 5.03% O 1.47% (0 3.45% () 1.32%
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