When a proposed merger between two companies is reviewed by the government, the relevant market is defined by
A)whether or not there are close substitutes for the products of the two firms.
B)how elastic the demand is for each firm's product.
C)counting the number of firms that produce the same product.
D)how much advertising is done in the industry.

Question

Quizplus · Accepted Answer

The relevant market is defined by whether or not there are close substitutes for the products of the two firms. This helps to determine the level of competition in the industry and the potential impact of the merger on consumers. Other factors such as elasticity of demand and number of firms may be considered as well, but the presence of close substitutes is typically the most important factor. Advertising may also be a factor but is not typically used as the sole determinant of the relevant market.

When a Proposed Merger Between Two Companies Is Reviewed by the Government