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Concept explainers
(a)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(b)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(c)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(d)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(e)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(f)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
(g)
To find:
The type of merger for the given situation.
![Check Mark](/static/check-mark.png)
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.
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.
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Chapter 15 Solutions
Exploring Microeconomics
- 0000 Health Suppose that you graph nations' health expenditures against income and see that the US's point lies below others (like in the stylized figure below). From the graph below, it appears that the US is However, this may not be the case if_ Switzerland UK US HPF Health expenditures productively inefficient; The US has a population that prefers spending their resources on health productively efficient; The US has a population that prefers spending their resources on health productively efficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others. productively inefficient; The US has lower levels of inherent health, therefore it has its own HPF which is lower than the others.arrow_forwardPlease match the definition to the term that best fits. This occurs when less-risky people are more likely to enroll in health insurance. How much spent out-of-pocket before insurance kicks-in. When no more units of a good can be produced without decreasing the amount of another good or service The amount that the insurance company pays the customer when an insured event occurs. When an individuals income is state independent Behavior changes that occur before an insured event happens and make that event more likely to occur. The fraction of the medical bill that the consumer is responsible for. The fixed amount that is paid for a service at the time service is rendered. This occurs when marginal benefit of a good to a consumer is equal to marginal cost of production Behavior changes that occur after an insured event happens and make recovering from that event more expensive. Monthly fee to enroll in insurance The oversupply of low-quality goods, products, or contracts that results…arrow_forwardfor the 2nd part the last option got cut off, there is also a none of the above choice tooarrow_forward
- MCB MCA The figure to the right shows the marginal cost of pollution abatement for two firms, A and B. The firms were initially abating 36 units of pollution each. Now they can trade pollution permits at a price of $32. As a result, firm permits and firm B A permits. Both firms are now better off and their total saving will be (Enter your answer rounded to the nearest $ whole number.) Dollars per Unit ($) 44 32 20 The Efficiency of Tradable Pollution Permits 31 36 41 Quantity of Pollution Abatement k -6°C Mostly clear Nextarrow_forwardThe figure to the right shows the marginal costs of abatement for an industry's only two firms, A and B. These firms were initially abating 30 units of pollution (the vertical dashed line). Now they can trade permits. The market price for permits under which an efficient pollution abatement will be achieved is $ rounded to the nearest whole number.) 192 176- 160- (Enter your response 144- 128- 112- 96 80- 64- 48- 32- 16 0 0 MC MCB 10 20 30 40 50 60 70 80 90 100 110 12 Pollution Abatement -6°C Mostly clear Nextarrow_forwardThe figure shows the private and social marginal costs and the marginal benefit of producing paper. The marginal social net benefit derived from the production of paper is OA. maximized at an output level of 35 because that is where MCp equals MB. OB. maximized at an output level of 25 because that is where MCs equal MB. OC. zero at an output level of 25 because that is where MCs equals MB. OD. zero at an output level of 35 because that is where MCp equals MB Dollars per Unit 25 35 Quantity of Paper -6°C Mostly clear D=MB Next MCS MCarrow_forward
- Refer to the given figure. MB and MC represent the social marginal benefit and social marginal cost of pollution abatement. The total net benefit from the optimal level of pollution abatement is $ (Enter your response rounded to the nearest whole number.) D Dollars per Unit 0 MC 18 810 Pollution Abatement -6°C Mostly clear Next MBarrow_forwardSuppose that each firm pollutes 100 units and is given 70 pollution permits (i.e., each firm must reduce pollution by 30 units if they do not trade their permits). If firms are allowed to trade their permits, then the equilibrium price of permits will be and permits. and as a result of being able to trade their OA. $10; firm A buys 20 permits from firm B profits fall by $200 for A and rise by $200 for B OB. $10; firm A buys 20 permits from firm B profits rise by $40 for A and rise by $40 for B OC. $12; firm A sells 10 permits to firm B; profits rise by $40 for A and rise by $40 for B OD. $12, firm A buys 10 permits from firm B profits fall by $120 for A and rise by $120 for B E. None of the above Marginal Abatement Cost ($) 18 16- 4 12- 10- 8- MCA 0 10 20 30 40 50 60 70 80 Pollution Abatement 90 -6°C Mostly clear Next M 40arrow_forwardConsider an economy in which there are two polluters: A and B. The marginal cost of pollution abatement curves are given in the diagram to the right. The total cost of reducing pollution by 60 units if it is done efficiently or $ equals $ if it is done by forcing each firm to reduce pollution by 30 units. OA. 925; 1125 OB. 900; 1100 OC. 850, 1050 OD. 800, 1000 OE. None of the above The efficient levels of pollution reduction can be achieved by using a pollution tax equal to $ unit A. 25 0 per MC 45 40 35 30- 25 20- 15 10- 5- Marginal Abatement Cost ($) 10 20 30 40 50 60 70 80 Pollution Abatement -6°C Mostly clear Next 90arrow_forward
- is initially abating Q units of pollution. Suppose that a system of tradeable pollution permits is introduced into this market and the equilibrium permit price is P* Firm B will sell permits to Firm A because OA. Firm A has lower costs of pollution abatement than Firm B. OB. Firm B's total cost of abating more pollution (area 1) is less than the revenue it earns from selling the permits (areas 5+3). OC. Firm B's total cost of abating more pollution (areas 3+1) is less than the revenue it earns from selling the permits (areas 5+3+1). OD. Firm B can buy the permits at a lower price than Firm A OE. the revenue Firm B earns from selling permits (areas 3+1) is greater than the cost it incurs from abating more pollution (area 1). Dollars per unit Q₁ Qo Q2 Pollution Abatement ил Next -6°C Mostly clear MCA MCBarrow_forwardThe accompanying diagrams show the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. If the government requires each firm to abate Q units of pollution, the social costs of this abatement OA. could be reduced further if Firm 2 increased abatement and Firm 1 reduced its abatement by the same amount OB. could be reduced further if each firm was required to abate more. OC. could be reduced further if each firm was allowed to pollute more. OD. would be minimized. WOE could be reduced further if Firm 1 increased abatement and Firm 2 reduced its abatement by the same amount. Dollars 5 Firm 1 MC1 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Abatement Q Firm 2 6- MC2 E 屈 Dollars -6°C Mostly clear Nextarrow_forwardThe diagram to the right illustrates a competitive industry in which there is a negative production externality. If a tax equal to $20/unit (i.e., a tax equal to the marginal external cost) is imposed, then the net social benefit will OA. fall by area A+ C. OB. rise by area B+C. OC. fall by area C. OD. rise by area B. OE. None of the above. W Marginal Benefit, Marginal Cost ($) 50 MCS MCp 45 35 30- 25 20 15 10- 5 0- 0 B D 10 20 30 40 50 60 70 80 90 100 110 Quantity -6°C Mostly clear Nextarrow_forward
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