There Are Three Banks in East Panhandle

question 91

Multiple Choice

There are three banks in East Panhandle.First State Bank which currently has 25 percent of the deposits in the area,Second State Bank which currently has 40 percent of the deposits,and Third State Bank which has the rest.What is the Herfindahl-Hirschman Index for East Panhandle (compute the share of Third State Bank first) ?

• A)100
• B)2,200
• C)3,450
• D)3,640
• E)None of the options is correct

---

Definitions:

Price of X

The cost at which a specific item or commodity, denoted as "X," is sold in the market.

Marginal Rate of Substitution

The exchange rate between goods that allows a consumer to trade off one product for another without altering their overall happiness.

Convex Preferences

A characteristic of consumer preference whereby a consumer prefers combinations or mixtures of goods over extreme amounts of single goods, displaying a preference for diversification.

Indifference Curve

A graph showing a combination of two goods that give a consumer equal satisfaction and utility, demonstrating the consumer's preference.