Chapter 15, Problem 13P

To determine

(a)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of N magazine and T magazine is a horizontal merger.

Explanation of Solution

If the N magazine and T magazine combine, then it will be a horizontal merger as they will sell the same product.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(b)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of T chicken and P chicken restaurant is a vertical merger.

Explanation of Solution

If T chicken and P chicken restaurant combines, then it will be vertical merger. This is because the product in T chicken is used in P chicken restaurant.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(c)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of C TV and JB Productions (TV show producer) is a vertical merger.

Explanation of Solution

If C TV and JB Productions (TV show producer) combine, then it will be considered as vertical merger as the JB Productions is used by C TV to produce one output.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(d)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of A aluminum manufacturer and M restaurant is a conglomerate merger.

Explanation of Solution

The merger of A aluminum manufacturer and M restaurant is a conglomerate merge as both belong to different market sector, one company produces aluminum while other is a fast food chain giant.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(e)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of A aluminum manufacturer and an aluminum-siding company is a vertical merger.

Explanation of Solution

If A aluminum manufacturer company combines, then it will be a vertical merger as the company supplies aluminum that the aluminum-siding company uses to produce final output.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(f)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of S Mattress Company and B Mattress Company is a horizontal merger.

Explanation of Solution

If S Company and B Mattress Company combine, then it is a horizontal merger. Both of these companies serve or produce the same output in the market.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.

To determine

(g)

To find:

The type of merger for the given situation.

Answer to Problem 13P

The merger of a bakery and a sandwich chain is vertical merger.

Explanation of Solution

If a bakery and a sandwich chain merge, then it is a vertical merger. The output produced by the sandwich chain will be sold in the bakery.

Economics Concept Introduction

Merger:

Merger term is used when two companies unite and form one company. Mergers are usually done to share more profit in the market or to reduce the cost of production.

There are three types of mergers:

Horizontal mergers: They are done between industries with the same output. The purpose is to increase their shares in the market

Vertical mergers: They are done between industries that produce the same good but at a different level. The purpose behind is to avoid any disruption in between manufacturing the goods

Conglomerate mergers: They are done between industries that produce different output catering to different as well as same markets. The purpose behind this is to expand their market reach and overall business.