If Firms E and Fin This Table Merged into a Single

question 205

Multiple Choice

If firms E and Fin this table merged into a single firm, the Herfindahl index would

• A)not change.
• B)rise, as would the four-firm concentration ratio.
• C)rise, but the four-firm concentration ratio would remain unchanged.
• D)fall.

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Definitions:

Recessions

Intervals of brief economic downturn during which there is a reduction in trade and industry activity, most often marked by a decline in GDP over two successive quarters.

Government Spending

Expenditures made by the government for the purpose of maintaining the economy and public services.

Paradox Of Thrift

The economic theory suggesting that increased saving in the aggregate can lead to a decrease in economic growth, income, and spending.

National Output

National output is the total value of services and goods produced by a country's economy over a specified period of time, essentially synonymous with Gross Domestic Product (GDP).