Economics
Question 1
The major short run potential cost benefit of these combinations is the thought that merging is crucial in creation of scales economies. The idea of being massive has thus ensured that the merged banks holds lowered overheads with developed manpower assuage. The improvement of manpower consumption permits the banks I saving cash in areas that are characterized by expenses through sources combination. The small sized firms may not have held the capability of employing personal lawyers. Therefore the merging helped in boosting their financial stability. This implies that having adequate financial resources they are able to obtain better services as well as save money. In addition the more the extended number of employees working for a firm the more the reduced health insurance cost that the firm is bound to incur based on every employee.
Question 2
Saying that a regional or national bank with the capital base of $300 billion is more likely to be efficient is a statement that is untrue. The aforementioned statement can thus be stated as relative as the associated costs with larger corporations are mainly higher as compared to the capital base of the small corporations.
Question 3
I believe that merges can be predicted by the scale economies. This is mainly because most of those firms that are involved in merging are attentive to ensuring that they attain a competitive advantage over the market competitors through threat curbing of those corporations that operate globally. This helps the firms in ensuring that they position themselves properly in order to gain the capability of competing globally. Mergers can thus be termed as dominant in every industry where corporations are striving to remain competitive. This therefore helps the firms in averting crisis which may be impending. With the economies scope corporations are thus able to share information as well as knowledge via increased merging in the global industry.
Reference
Hirschey, M. (2008). Managerial economics. New York: Cengage learning.
