What Is a Vertical Merger

question 45

Multiple Choice

What is a vertical merger?

• A) a merger between firms in totally unrelated businesses
• B) a merger that integrates the operations of a supplier and a customer
• C) a merger between two companies in similar fields whose sales do not overlap
• D) a merger between two or more companies that compete in the same business and geographical market

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Definitions:

Fixed Costs

Charges that are unaffected by production or sales volume, for example, monthly rent or payroll expenses.

Selling Price

The price at which a product or service is offered to customers.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating the portion of sales available to cover fixed costs and generate profit.

Fixed Costs

Expenses that do not fluctuate with changes in production level or sales volume, such as lease payments, salaries, and insurance.