If an Industry Consists of Only Two Firms with Equal

question 83

Multiple Choice

If an industry consists of only two firms with equal market shares, then the Herfindahl index is

• A)50
• B)100
• C)2, 500
• D)5, 000
• E)10, 000

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Definitions:

Limited Incomes

Economic condition where individuals or households have restricted earnings, impacting their spending capabilities and living standards.

Households

The individuals or group of people living together in the same dwelling and functioning as a single decision-making economic unit, typically sharing income and expenses.

Circular Flow

An economic model that depicts how money and goods flow through the economy in a continuous loop between households and firms.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses and costs incurred in operating the business.