The concentration and Herfindahl indices computed by the U.S. Bureau of Census must be interpreted with caution because:

Question

Quizplus · Accepted Answer

The concentration and Herfindahl indices computed by the U.S. Bureau of Census have limitations. They do not take into account the presence of foreign firms, which may overstate the actual level of concentration in markets served by foreign firms. On the other hand, they also have limitations in measuring concentration in local markets, such as the gasoline market, where there may be oligopolies that are not reflected in the concentration indices. Therefore, both options A and B are correct, making option C the best choice. Option D is not correct because the statements in options A and B are accurate to some extent.

The Concentration and Herfindahl Indices Computed by the U