Paper 3 · Production and Costs
A reason a firm carries out horizontal integration is that
Ait guarantees the firm a supply of raw materials at a fixed price
Bit obliges the government to grant the firm a monopoly by law
Cit removes a competitor and raises the firm's share of the market
Dit allows the firm to sell its output directly to final consumers
Explanation: A rival that has been absorbed can no longer undercut the firm on price, so competition falls and the enlarged firm has more control over the price it charges. Securing raw materials and reaching the final consumer are reasons for vertical integration instead.
Derived from ZIMSEC Economics 4050/3 Paper 3, June 2023, Q6