Suppose a cereal firm, Nabisco, merges with both a wheat firm and milling firm. This is an example of a
A) vertical merger.
B) horizontal merger.
C) parallel merger.
D) diagonal merger.

Question

Quizplus · Accepted Answer

A vertical merger occurs when firms operating at different stages of the production process merge together. In this case, Nabisco (a cereal firm) is merging with a wheat firm and milling firm, which are both involved in the production process before the cereal is made. Therefore, this is an example of a vertical merger.

Suppose a Cereal Firm, Nabisco, Merges with Both a Wheat