Future Business Leader Achievments (FBLA) Economics Practice Exam

The correct answer is that when two or more firms from completely separate industries combine to form a single firm, this is called a conglomerate. A conglomerate is a type of diversification strategy where a company acquires or merges with other companies that operate in unrelated business sectors. This approach allows the conglomerate to reduce risk by spreading its investments across different industries, which can stabilize overall revenue and profits even if one industry faces downturns.

In contrast, options like vertical and horizontal partnerships refer to different types of mergers. A vertical partnership occurs between firms at different stages of production within the same industry, while a horizontal partnership is between companies in the same industry that are at the same stage of production. A corporate charter pertains to the legal document that establishes a corporation, which is unrelated to the concept of firms from separate industries merging.