Asked by James Caprarelli on Sep 24, 2024
Verified
After firm A acquired firm B,it raised the prices for the goods produced by both firms.This can increase profits if those goods are
A) Substitutes
B) Complements
C) Not related
D) None of the above
Acquired
Something obtained, typically by a company purchasing another company or business.
Substitutes
Products or services that can be used in place of another, fulfilling a similar need or purpose for the consumer.
- Understand the consequences of product complements and substitutes for pricing and marketing tactics.
- Comprehend the strategic choices behind acquisitions, especially in scenarios concerning substitutes and complementary products.
Verified Answer
VB
vijay bhatiya1 day ago
Final Answer :
A
Explanation :
If the goods produced by both firms are substitutes, raising their prices could lead to an increase in demand for the other firm's goods, resulting in higher profits for the acquiring firm. This is because consumers may switch to the substitute produced by the other firm due to the price increase.
Learning Objectives
- Understand the consequences of product complements and substitutes for pricing and marketing tactics.
- Comprehend the strategic choices behind acquisitions, especially in scenarios concerning substitutes and complementary products.
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