Multiple Choice
Suppose that Industry A has two firms of the same size and Industry B has three firms with 65 percent, 30 percent, and 5 percent market shares, respectively. Which of the following is true of the Herfindahl-Hirschman indexes for the two industries?
A) The HHI for Industry A is 50 higher than the HHI for Industry B.
B) The HHI for Industry A is 50 lower than the HHI for Industry B.
C) The HHI for Industry A is 150 higher than the HHI for Industry B.
D) The HHI for Industry A is 150 lower than the HHI for Industry B.
E) The HHI is the same for both industries.
Correct Answer:
Verified
Correct Answer:
Verified
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