If the Herfindahl-Hirschman Index in an industry is above 1,800,a merger that increases the Herfindahl-Hirschman Index by over 50 points will
A) be allowed by the government.
B) be challenged by the government.
C) be encouraged by the government.
D) increase competition in that industry.
E) never be allowed to happen.

Question

Quizplus · Accepted Answer

A Herfindahl-Hirschman Index above 1,800 indicates high market concentration and limited competition. A merger that increases the index by over 50 points will result in further concentration and possibly even a monopoly. This would be viewed as anti-competitive behavior by the government and is likely to be challenged.

If the Herfindahl-Hirschman Index in an Industry Is Above 1,800,a