The Herfindahl-Hirschman Index Is One Factor Used to Determine Whether

question 76

Multiple Choice

The Herfindahl-Hirschman Index is one factor used to determine whether a merger between two firms should be allowed.Which of the following statements regarding the value of the Index for a given industry is true?

• A)If a merger would result in an Index value less than 1,000, the merger would not be challenged.
• B)If a merger would result in an Index value of 1,000 or more, the industry would be considered a monopoly and the merger would be challenged.
• C)If a merger resulted in an Index of between 1,000 and 1,800, the industry would be considered competitive and the merger would not be challenged.
• D)If a merger would increase the Index by 100, the industry would be considered a monopoly and the merger would be challenged.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.

Hiring Capital

The resources, often financial, that an organization allocates to the process of recruiting and acquiring new employees or talent.

Future Profits

Expected gain in financial terms that a business anticipates receiving over a forthcoming period, based on current strategies, market conditions, and operations.

Hiring Labor

The process of finding, evaluating, and employing individuals to work for a business or organization.