-The Herfindahl-Hirschman Index Is Used as a Guideline to Determine

question 150

Essay

-The Herfindahl-Hirschman Index is used as a guideline to determine if a market is competitive or concentrated. Calculate the index value for each market described below.
a) 100 firms, each of which produces 1 per cent of market output
b) 50 firms, each of which produces 2 per cent of market output
c) 25 firms, each of which produces 4 per cent of market output
d) 20 firms, each of which produces 5 per cent of market output
e) 10 firms, each of which produces 10 per cent of market output
f) 5 firms, each of which produces 20 per cent of market output
g) 2 firms, each of which produces 50 per cent of market output

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Definitions:

Conversion Cost

The total cost of converting raw materials into finished products, combining both direct labor costs and manufacturing overhead.

Work in Process-Assembly Department

Inventory that is in the process of being manufactured but is not yet complete.

Equivalent Unit

A concept used in cost accounting to represent a partial unit of production, allowing for the calculation of costs for partially completed goods.

First-In, First-Out

An inventory valuation method where the first items placed in inventory are the first ones sold, used primarily for cost flow assumption purposes.