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The economies of scale from a merger result from which of the following?Multiple select question.complementary resourceselimination of inefficient managementincreased tax burden and operating costtechnology transfer

Question

The economies of scale from a merger result from which of the following?Multiple select question.complementary resourceselimination of inefficient managementincreased tax burden and operating costtechnology transfer

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Solution

The economies of scale from a merger can result from:

  1. Complementary Resources: When two companies merge, they can combine their resources. This can lead to greater efficiency and productivity, as the merged company can take advantage of the best resources from each original company. For example, if one company has a strong sales team and the other has a strong product development team, the merged company could potentially sell more products and develop better ones.

  2. Elimination of Inefficient Management: A merger can also lead to economies of scale by eliminating inefficient management. If one company is managed more efficiently than the other, the merger can result in the more efficient management style being implemented across the entire merged company. This can lead to cost savings and increased productivity.

  3. Technology Transfer: If one company has superior technology, a merger can result in this technology being used across the entire merged company. This can lead to cost savings and increased productivity, as the company can produce more goods or services with the same amount of resources.

Increased tax burden and operating cost is not typically associated with economies of scale from a merger. In fact, mergers often aim to reduce costs, not increase them.

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