If the Herfindahl Index Is the Same in Two Industries

question 81

Multiple Choice

If the Herfindahl index is the same in two industries, we can conclude that

• A)the number of firms in each industry is the same
• B)there must not be the same number of firms in the two industries
• C)the sum of the squared market shares of all firms is the same in the two industries
• D)there must be an identical distribution of market share among firms in the two industries
• E)there must be a different distribution of market share among firms in the two industries

Understand the dynamics between advertising, market power, and product quality signaling.

Understand the concept of market concentration and calculate concentration ratios.

Distinguish between different market structures based on characteristics and number of firms.

Understand the role and effect of advertising and brand names on market efficiency.

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Definitions:

Median Voter's Preference

A concept in political economy suggesting the outcome of a majority-vote decision process will most closely align with the preferences of the median voter.

Vote With Their Feet

The concept that people show their preferences or dissatisfaction with a situation by leaving an area or opting out of a system.

Free-Rider Problem

A situation where individuals consume more than their fair share of a public resource, or shoulder less of the cost of its production, benefiting from a good without properly paying for it.

Street Performers

Individuals who entertain the public in outdoor locations, often relying on voluntary donations for income.