The Following Three FIs Dominate a Local Market and Their

question 62

Multiple Choice

The following three FIs dominate a local market and their total assets are given below. If Bank C splits into two separate institutions at ½ its original size each, what is the new Herfindahl (HHI) Index?

• A)60.
• B)340.
• C)2,538.
• D)2,847.
• E)10,000.

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Definitions:

Drive-Reduction Theory

A psychological concept suggesting that motivation arises from biological needs that push organisms to seek homeostasis through reducing drives stemming from those needs.

Tension

The physical or emotional strain caused by conflicting or demanding circumstances.

Stability

The condition of being resistant to change or variation, often used in psychological contexts to refer to emotional or mental consistency.

Primary Drives

Basic, instinctual drives that motivate behaviors necessary for survival, such as hunger, thirst, and avoidance of pain.