One Advantage of the Herfindahl Index Over the Concentration Ratio

question 109

Multiple Choice

One advantage of the Herfindahl index over the concentration ratio is that the:

• A) Herfindahl index ignores the small firms that always exist on the fringes of any industry.
• B) Herfindahl index is easier to compute.
• C) Herfindahl index takes into account all firms in an industry.
• D) concentration ratio excludes the largest firms in an industry.

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Definitions:

LSAT Exam

The Law School Admission Test, a standardized test designed to assess critical reading, analytical reasoning, and logical reasoning skills.

National Average

The average of a specific variable or measurement across an entire nation, often used in economic, educational, or environmental statistics.

University of Pennsylvania

An Ivy League research university located in Philadelphia, known for its strong programs in business, engineering, and medical research.

Random Sample

A selection of members from a broader group, with each member having an equal opportunity to be picked.