Suppose That Industry a Has Two Firms of the Same

question 28

Multiple Choice

Suppose that Industry A has two firms of the same size and Industry B has three firms with 65 percent, 30 percent, and 5 percent market shares, respectively. Which of the following is true of the Herfindahl-Hirschman indexes for the two industries?

• A)The HHI for Industry A is 50 higher than the HHI for Industry B.
• B)The HHI for Industry A is 50 lower than the HHI for Industry B.
• C)The HHI for Industry A is 150 higher than the HHI for Industry B.
• D)The HHI for Industry A is 150 lower than the HHI for Industry B.
• E)The HHI is the same for both industries.

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Definitions:

Community Stability

The aim of achieving a balanced, harmonious state within a community where social cohesion, economic prosperity, and environmental sustainability are maintained over time.

Pilgrims

Puritan separatists who broke completely with the Church of England and sailed to the New World aboard the Mayflower, founding Plymouth Colony on Cape Cod in 1620.

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Land areas from which natural vegetation has been removed, often for agricultural purposes, development, or construction.