The larger the Herfindahl index, the
A) less the degree of import competition in an industry.
B) greater the degree of import competition in an industry.
C) less the degree of market power in an industry.
D) greater the degree of market power in an industry.

Question

Quizplus · Accepted Answer

The Herfindahl index measures the concentration of market power in an industry. A higher index indicates greater concentration and therefore, greater market power among the dominant firms in that industry. Therefore, the correct answer is D, greater the degree of market power in an industry.

The Larger the Herfindahl Index, the