The business activities of Firm A confer positive externalities on Firm B, and the business activities of Firm B confer positive externalities on Firm A. If the two firms merged, then

a. total surplus in their respective markets would decrease.

b. their respective markets would move further away from the social optimum G

c. the merger would serve as an example of a misguided public policy toward externalities.

d. their respective markets would move closer to the social optimum.

Question

Business

Riya

8 February, 20:24

The business activities of Firm A confer positive externalities on Firm B, and the business activities of Firm B confer positive externalities on Firm A. If the two firms merged, then

a. total surplus in their respective markets would decrease.

b. their respective markets would move further away from the social optimum G

c. the merger would serve as an example of a misguided public policy toward externalities.

d. their respective markets would move closer to the social optimum.

+2

Answers (1)

Know the Answer?

Jovanny Boyle · Answer 1

The correct answer is D

Explanation:

Merger means that the firms with their consent, joins two or more firms or companies in order to accomplish the greater efficiencies in the productivity as well as on scale.

So, when the firms merge, which means that the business activities of the firms and their respective markets move or work closer to the social optimum in order to accomplish the goals.