Suppose That Industry X Has Two Firms with Equal Market

question 173

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:

Majority Rule

A decision-making rule in which the preferences of more than half of the members in a group have authority over decisions.

Transitivity Property

is a mathematical concept applied in various fields, indicating that if relation A is related to B, and B is related to C, then A is necessarily related to C.

Adverse Selection

A scenario where information asymmetry results in high-risk individuals being more likely to engage in agreements, negatively affecting the other party.

Pairwise Voting

A voting system where choices are compared to each other one pair at a time, with preferences collected and the most preferred option determined through this comparison process.