Using the SSNIP test, if two firms merge and the result is that the new, merged firm can raise the price of its product by _____percent for _____year(s), then the product the merged firm produces represents a market.
A)five; five
B)one; one
C)five; one
D)one; five

Question

Quizplus · Accepted Answer

The SSNIP test stands for the Small but Significant and Non-transitory Increase in Price test. The test is used to determine whether a merger or acquisition will create or enhance market power. According to the test, if a merged firm can raise the price of its product by a small amount, typically 5% or less, for a sustained period, typically one year, then the product the merged firm produces represents a market. Option C states that the merged firm can raise the price of its product by 5% for one year which aligns with the SSNIP test, making it the best answer.

Using the SSNIP Test, If Two Firms Merge and the Result