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:

Multiple Regression Analysis

A statistical technique used to determine the relationship between one dependent variable and two or more independent variables.

Labor Surplus

A situation where the supply of labor exceeds the demand for it, typically leading to higher unemployment rates.

Downsizing

The act of reducing the number of employees within a company, typically to cut costs or improve efficiency.

Natural Attrition

The reduction in workforce size through normal means, such as retirement or resignation, without the need for layoffs.