Asked by Laisha Franco on Apr 30, 2024
Verified
Horizontal mergers can create economies of scale.
Horizontal Mergers
A business consolidation that occurs between firms that operate in the same industry or production stage.
Economies of Scale
Cost advantages reaped by companies when production becomes efficient, resulting in the average cost per unit of output decreasing with increasing scale.
- Evaluate the importance of competitive benefits gained by merging companies.
- Explore the consequences of merger varieties on competition within the marketplace.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
True
Explanation :
Horizontal mergers involve the combination of two companies that are in the same industry and produce similar products or services. By merging, they can eliminate redundancies and overlap, leading to larger production volumes and lower costs per unit, which creates economies of scale.
Learning Objectives
- Evaluate the importance of competitive benefits gained by merging companies.
- Explore the consequences of merger varieties on competition within the marketplace.