If an Industry Has a Herfindahl Index of 3,000, the Contestable

question 75

Multiple Choice

If an industry has a Herfindahl index of 3,000, the contestable market model probably would predict that the industry would be more likely to have a:

• A) monopolistic price.
• B) competitive price.
• C) monopolistic price if there are no barriers to entry.
• D) competitive price if there are no barriers to entry.

---

Definitions:

Reciprocal Helping

A social behavior where an individual provides help to another with the expectation that the help will be returned in the future, promoting cooperation and social bonding.

Deindividuation

A psychological state where an individual loses self-awareness and self-restraint, often occurring in group settings that promote anonymity.

Lowballing Strategy

A sales technique where an item is initially offered at a lower price than is actually intended to be charged, after which the price is increased.

Obligated To Reciprocate

A social norm suggesting that individuals should return a favor or service, contributing to the establishment of reciprocal social exchanges.