On which two factors do the consequences of a merger depend?
The consequences of a merger depends on market structure and on how the merger affects costs. If two perfectly competitive firms merge, their successor (the merged firm) will still be a price-taker.
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Price and output decisions are two aspects of the same choice.
Answer the following statement true (T) or false (F)
Which of the following is LEAST likely to be an outcome of a cartel as compared to the situation before the cartel was formed?
A) Cartel members charge higher prices. B) Cartel members reduce production. C) Cartel members make fewer profits. D) Cartel members do not compete with each other in pricing decisions.
Jim is haggling with a car dealer on the price of a used car. During the bargaining, Jim discovers that the car has a significant number of scratches which he had not noticed before. The total surplus from the sale has
a. Increased b. Decreased c. Was not affected d. All of the above
If the United States experiences an economic boom, how will this affect the foreign exchange value of the U.S. dollar?
a. It will fall because other nations would be forced to raise their interest rates. b. It will fall because the United States will import more goods and services, leading to an increased demand for foreign currencies. c. It will rise because U.S. GDP would be rising faster than other countries. d. It will rise because the Fed will have to lower U.S. interest rates. e. It will rise because the United States will import more goods and services, leading to an increased demand for foreign currencies.