Suppose That Industry X Has Two Firms with Equal Market

question 258

Multiple Choice

Suppose that Industry X has two firms with equal market shares, and Industry Y has three firms with 65 percent, 30 percent, and 5 percent market shares, respectively. Which of the following is true?

• A) The HHI for Industry X is 50 higher than the HHI for Industry Y.
• B) The HHI for Industry X is 150 lower than the HHI for Industry Y.
• C) The HHI for Industry X is 100 higher than the HHI for Industry Y.
• D) The HHI is the same between Industry X and Industry Y.

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Definitions:

Consultants

Professionals who provide expert advice in a particular area or specialized field to businesses or individuals.

Credit Default Swaps

Financial swap agreements that transfer the credit exposure of fixed income products between parties.

CDS Buyer

An entity that purchases a credit default swap, obtaining protection against specific credit risks.

CDS Seller

A counterparty in a credit default swap agreement who provides credit protection, compensating the buyer in case of a debt default or other credit event.