If There Are Four Firms in an Industry with Market

question 34

Multiple Choice

If there are four firms in an industry with market shares of 50 per cent, 40 per cent, 5 per cent, and 5 per cent, the Herfindahl-Hirschman Index is

• A) 25.
• B) 100.
• C) 3,450.
• D) 4,150.
• E) undefined because there are not 50 firms in the industry.

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Definitions:

Specialization

involves focusing on a narrow range of products or services to gain efficiency and improve competitive advantage.

Exchange

The act of giving one item in return for another, often seen in finance and trade as the swapping of goods, services, or financial instruments.

Trade

The exchange of goods, services, or both between two or more parties, either across international borders or within a single market.

Value

The importance, worth, or usefulness of something, often in economic terms as perceived by the consumer.