Mergers may provide reductions in average production cost as a result of:
A) increased market share.
B) a more efficient management.
C) economies of scale.
D) diversification.

Question

Quizplus · Accepted Answer

Mergers can provide economies of scale, which means that as the size of the merged company increases, it can achieve lower average production costs due to the ability to spread fixed costs over a larger output. This can result in increased efficiency and competitiveness in the marketplace. Increased market share, a more efficient management, and diversification may also be potential benefits of a merger, but they do not necessarily lead to cost reductions.

Mergers May Provide Reductions in Average Production Cost as a Result