Question 1

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. What is the Herfindahl-Hirschman index in the market for cookies in Eatsweetland?

Accepted Answer

The Herfindahl-Hirschman index (HHI) is a measure of market concentration. It is calculated by summing the squares of the market shares of all the firms in the market. In this case, the market share of the largest 5 firms is:Firm 1: 20%Firm 2: 15%Firm 3: 12%Firm 4: 10%Firm 5: 8%The market share of the remaining 10 firms is:10 firms x $3 million / $80 million = 37.5%The HHI is then calculated as:HHI = (20^2 + 15^2 + 12^2 + 10^2 + 8^2 + 37.5^2) = 1013Therefore, the correct answer is A) 1013.

Question 2

-The table above lists the market shares of the twenty makers of personal computers. The Herfindahl-Hirschman Index for this industry equals

Accepted Answer

The answer of 
-The table above lists the market shares...

Question 3

-Based on the above table, which shows the firms and sales in an industry, what is the four-firm concentration ratio?

Accepted Answer

The four-firm concentration ratio is calculated by summing the market shares of the four largest firms in the industry. The choice B, 74, likely represents the percentage of total industry sales accounted for by the top four firms.

Question 4

If a market is shared equally by four firms, the Herfindahl-Hirschman Index is

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm and then summing the results. If four firms share the market equally, each has a 25% share. The HHI is (25^2) + (25^2) + (25^2) + (25^2) = 2,500.

Question 5

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. Which of the following best describes the structure of the market for cookies in Eatsweetland?

Accepted Answer

The answer of 
-The cookie industry in Eatsweetland consists of...

Question 6

If a market is shared equally by 200 firms the Herfindahl-Hirschman Index is

Accepted Answer

The answer of If a market is shared equally by...

Question 7

The Herfindahl-Hirschman Index for a monopoly is

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm in the industry and then summing the resulting numbers. For a monopoly, the market share is 100%, so the HHI is 100^2 = 10,000.

Question 8

In an oligopoly with two firms, one firm's share of the market is 70 percent. The Herfindahl-Hirschman Index is

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm and summing the results. If one firm has 70% of the market, its contribution to the HHI is 70^2 = 4900. The other firm has 30% of the market, contributing 30^2 = 900. Therefore, the HHI is 4900 + 900 = 5800.

Question 9

There are six firms in an industry, with market shares of 50 percent, 25 percent, 10 percent, 10 percent, 3 percent and 2 percent. The four firm concentration ratio is ________, and the HHI is ________.

Accepted Answer

The four-firm concentration ratio is the sum of the market shares of the four largest firms: 50% + 25% + 10% + 10% = 95%. The Herfindahl-Hirschman Index (HHI) is calculated by squaring each firm's market share and summing the results: 50^2 + 25^2 + 10^2 + 10^2 + 3^2 + 2^2 = 3338.

Question 10

If a market is shared equally by 100 firms, the Herfindahl-Hirschman Index is

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market shares of all firms in the market. If 100 firms share the market equally, each firm has a 1% market share. The HHI is 100*(1^2) = 100.

Question 11

If there are five firms in an industry, each with a market share of 20 percent, the Herfindahl-Hirschman Index (HHI) of concentration is

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market shares of all firms in the industry. In this case, each firm has a market share of 20%, so the HHI is 5*(20^2) = 5*400 = 2000.

Question 12

-The table above lists the market shares of the twenty makers of personal computers. Based upon the Herfindahl-Hirschman Index for this industry, the Justice Department would

Accepted Answer

The Herfindahl-Hirschman Index (HHI) measures market concentration. If the industry has many firms with small market shares, the HHI would be low, indicating a competitive market.

Question 13

Suppose that there are 10 firms in an industry, each accounting for 10 percent of industry sales. Two of these firms decide to merge. Which of the following statements about the impact of this merger is (are) INCORRECT?

Accepted Answer

The answer of Suppose that there are 10 firms in...

Question 14

-The table above lists the market shares of the twenty makers of personal computers. Based upon the Herfindahl-Hirschman Index

Accepted Answer

The Herfindahl-Hirschman Index (HHI) measures market concentration. A low HHI indicates a competitive industry, which is likely the case if there are twenty makers of personal computers with distributed market shares.

Question 15

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. What is the four-firm concentration ratio in Eatsweetland's cookie industry?

Accepted Answer

The answer of 
-The cookie industry in Eatsweetland consists of...

Question 16

Suppose there are five firms in the disposable diaper market. Hug-Me's share is 30 percent. Plumper's share is 30 percent. Drippy's share is 20 percent. Kool Kid's share is 10 percent. Nappomatic's share is 10 percent. The Herfindahl-Hirschman Index in this industry is

Accepted Answer

The answer of Suppose there are five firms in the...

Question 17

-The cookie industry in Eatsweetland consists of 15 firms. The industry sales are $80 million per month. The sales of the largest 5 firms are shown in the table below. The rest 10 firms have sales of $3 million each. The U.S. Department of Justice would classify the market for cookies in Eatsweetland as

Accepted Answer

The Herfindahl-Hirschman Index (HHI) is used to classify market competitiveness. In this case, the HHI is calculated based on the market shares of the firms. The largest 5 firms have significant sales, but the presence of 10 other firms with $3 million each indicates moderate competition.

Question 18

-The table above lists the market shares of the twenty makers of personal computers. The four-firm concentration ratio tells us that

Accepted Answer

The four-firm concentration ratio measures the total market share of the four largest firms in an industry. If the four largest firms have 20 percent of the market, it indicates a low concentration ratio, suggesting a competitive market.

Question 19

-The table above lists the market shares of the twenty makers of personal computers. The four-firm concentration equals

Accepted Answer