A Vertical Merger Occurs When

question 86

Multiple Choice

A vertical merger occurs when:

• A) the products of the merging firms were not related in any manner before the merger.
• B) one firm is a producer of products, and the other firm is a producer of services.
• C) one firm is a domestic firm, and the other is a foreign company.
• D) the firms stood in a buyer-seller relationship before the merger.
• E) the merger partners were competitors.

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Definitions:

Carpet Industry

The sector of the economy specialized in the manufacture and sale of carpets and rugs.

Mills

Factories or plants that process and manufacture products from raw materials.

Marginal Returns

The additional output produced as a result of utilizing one more unit of input, which can decrease as more units are added.

Labor

The physical and mental effort used in the production of goods and services.