If a Company That Drilled for and Produced Oil Acquired

question 152

Multiple Choice

If a company that drilled for and produced oil acquired a firm which refined oil into gasoline, this would be referred to as a

• A) horizontal merger.
• B) vertical merger.
• C) conglomerate merger.
• D) reverse merger.

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Definitions:

Externality

Actions of one party impose costs or benefits on a second party.

Economy of Scale

The cost advantages that enterprises obtain due to their scale of operation, typically resulting in decreased per-unit cost as production increases.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use doesn't reduce its availability to others.

Total Damage

The cumulative harm or loss resulting from an action or event, encompassing both material and immaterial impacts.