Suppose That a Particular Industry Has a Four-Firm Concentration Ratio

question 30

Multiple Choice

Suppose that a particular industry has a four-firm concentration ratio of 85 and a Herfindahl index of 3,000. Most likely, this industry would achieve

• A) both productive efficiency and allocative efficiency.
• B) allocative efficiency but not productive efficiency.
• C) neither productive efficiency nor allocative efficiency.
• D) productive efficiency but not allocative efficiency.

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Definitions:

Optimal Weights

In portfolio management, it refers to the proportionate holdings of different assets that maximize the portfolio's expected return for a given level of risk.

Expected Rate

Anticipated return on an investment, often based on historical data or the inherent risk of the investment.

Dollar-weighted Return

This type of return measures the performance of an investment, taking into account the timing and magnitude of inflows and outflows of money.

Time Period

The duration or length of time for which an investment, project, data collection, or any specified activity lasts.