a. Average cost of production for two firms:
Peter's firm average cost in %= $ 330,000/$5,300,000 *100
= 6.23 % approximately
Jan's firm average cost in % = $58,000/$630,000 * 100
= 9.21 % approximately
b. After merger of two firms,
Total operating costs of two firms=$330,00 + $58,000
Total sales volume of two firms=$5,300,000 + $630,000
Total average cost = $388,000/$5,930,000 *100
= 6.54% approximately
c. Total cost of production of two firms=$350,000
Total sales volume of two firms=$5,930,000
Total average cost=$350,000/$5,930,000 *100
= 5.90% approximately
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