Describe the three types of mergers and give examples
What will be an ideal response?
There are horizontal, vertical, and conglomerate mergers. (a) Horizontal mergers are between companies selling similar products in the same market. Two examples are the Chase Manhattan bank merger with Chemical Bank, and Boeing’s merger with MacDonald Douglas. (b) Vertical mergers are between firms at different stages of the production process in the same industry. An example would be Pepsico’s merger with three restaurants—Pizza Hut, Taco Bell, and Kentucky Fried Chicken (now Tricon Global Restaurants). (c) Conglomerate mergers are between firms in unrelated industries such as that between Walt Disney Company (movies) and American Broadcasting (radio and television) or between America Online (Internet service) and Time Warner (publishing and broadcasting).
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An increase in the price level causes a ________ the IS curve and a ________ the aggregate demand curve
A) movement up along; movement down along B) shift to the right of; movement down along C) movement down along; movement down along D) shift to the left of; movement up along
The notion that lenders must select from a pool of bad credit risks, because the most undesirable borrowers are those that most actively seek out a loan is known as the ________
A) moral hazard problem B) ornamental torsion problem C) adverse selection problem D) asymmetric innovation problem
Which of the following market structures describes an industry in which a group of firms formally agree to control prices and output of a product?
a. Perfect competition. b. Monopoly. c. Oligopoly. d. Cartel. e. Monopolistic competition.
After John discovered he had a serious illness, he immediately purchased health insurance without disclosing his illness to the insurance company. This is an example of adverse selection
a. True b. False Indicate whether the statement is true or false