2015 recorded mergers worldwide worth more than US$4000 billion, with many taking place in the USA and the UK. Some mergers happen between firms based in different countries. These are shaped by several influences, including the size and structure of the markets in the countries concerned and their exchange rates. Mergers affect the degree of competition in markets.
(a)[2]
Define ‘conglomerate integration’ in business terms.
(b)[4]
Explain why firms in a perfectly competitive market act as price-takers.
(c)[6]
Analyse the factors that can cause a country’s exchange rate to rise.
(d)[8]
Discuss whether a large firm will always enjoy lower average costs of production than a small firm.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A merger of firms” …