Which of the following terms refers to the situation when one firm purchases or takes over another firm?

• A. Acquisition
• B. Joint venture
• C. Horizontal merger
• D. Collusion

Answer: (A)

Verified step by step guidance

1. Understand the key terms related to firm combinations: an Acquisition occurs when one firm purchases or takes over another firm, gaining control over it.
2. A Joint venture is a business arrangement where two or more firms collaborate on a specific project or business activity, sharing resources and risks, but remaining separate entities.
3. A Horizontal merger happens when two firms operating in the same industry and at the same stage of production combine to form a single firm.
4. Collusion refers to an agreement between firms to limit competition, often by fixing prices or output, but does not involve ownership changes.
5. Therefore, identify that the term describing one firm purchasing or taking over another is Acquisition.