Paul Bergen and Virginia Clancy each own a 100-acre soybean farm in Soyburg, Illinois. Together they grow 1/1000th of 1 percent of the nation's soybeans. When they merge, it will:
A) attract the attention of the Federal Trade Commission.
B) be a horizontal merger.
C) reduce competition in the soy market.
D) increase the market power of Paul and Virginia.

Question

Quizplus · Accepted Answer

A merger between two small farms in a market where there are many other competitors is unlikely to attract the attention of the Federal Trade Commission. However, the merger would technically be classified as a horizontal merger, as both farms are producing the same product (soybeans) and are at the same stage in the production process. This means that the merger could potentially reduce competition in the soy market and increase the market power of Paul and Virginia.

Paul Bergen and Virginia Clancy Each Own a 100-Acre Soybean