General Mills,a producer of breakfast cereal,has proposed an acquisition of Kellogg,another cereal producer.The combined firm is expected to be able to negotiate a reduced cost for the grain used in its cereal.What type of synergies are the most likely reason behind this merger?

Question

Quizplus · Accepted Answer

Economies of scale are achieved when increasing production leads to lower costs per unit, which is likely the case here as the merged firm can buy grain in larger quantities, potentially at a lower price.

General Mills,a Producer of Breakfast Cereal,has Proposed an Acquisition of Kellogg,another