What Would the Herfindahl-Hirschman Index Equal for an Industry Consisting

question 152

Multiple Choice

What would the Herfindahl-Hirschman Index equal for an industry consisting of six firms with market shares of 5%, 10%, 15%, 20%, 25%, and 25%?

• A)100 
• B)1,350 
• C)1,375 
• D)2,000

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Definitions:

Variable Cost

Costs that vary directly with the level of production or the volume of output.

Operating Leverage (DOL)

A financial metric indicating the proportion of fixed versus variable costs a company has, which affects its earnings before interest and taxes (EBIT) for every percentage change in sales.

Variable Cost

Costs that vary directly with the level of production or volume of output.

Fixed Costs

Constant expenses that do not change in relation to the level of production or sales.