When two firms in the same industry form one larger company, this is a __________ merger. (LO4) a) horizontal c) conglomerate b) vertical d) diversifying

First, let's go through the different types of mergers presented in the options so that we have a clear understanding of each one: a) Horizontal Merger: A merger between two firms in the same industry that are at the same level of production. In other words, they are competitors that produce similar products or services. b) Vertical Merger: A merger between two firms in the same industry but at different levels of production. For example, a manufacturer may merge with a supplier to streamline the production process. c) Conglomerate Merger: A merger between two firms that operate in completely different industries. These companies often merge to diversify their business operations and maximize profits. d) Diversifying Merger: This term is somewhat ambiguous, as it could refer to either conglomerate mergers or mergers within the same industry that aim to expand the company's product or service offerings. Now that we have a clear understanding of all the different types of mergers, we can identify which one best matches the description from the exercise.

Based on the given description in the exercise ("when two firms in the same industry form one larger company"), we can narrow down the options to two possible answers: a) horizontal merger and b) vertical merger. Since the description does not specify any information about the level of production, we can conclude that the answer is: a) Horizontal Merger.