The government is most likely to block a proposed merger between two companies when:
A) the cross-elasticity between the companies' products is positive and large.
B) the cross-elasticity between the companies' products is negative and large.
C) the income elasticity of the companies' products is positive.
D) the income elasticity of the companies' products is negative.

Question

Quizplus · Accepted Answer

A large positive cross-elasticity indicates that the products are close substitutes, suggesting that the merger could significantly reduce competition in the market.

The Government Is Most Likely to Block a Proposed Merger