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JAMB Commerce 1997 Question 10

Question 10

Business Combinations

The major objective of corporate mergers is to

  1. A.minimize the effects of taxation
  2. B.increase financial advantage
  3. C.facilitate profit maximization
  4. D.enhance economies of scale.
Show the answer and explanation

Answer: D (enhance economies of scale.)

Explanation

Merging firms become larger and can enjoy economies of scale such as bulk buying and cheaper finance.