51) If the HHI for the widget industry is 1,200, then the market structure is
A) a monopoly.
B) monopolistic competition.
C) an oligopoly.
D) perfect competition.
E) impossible to determine.
52) A market in which the Herfindahl-Hirschman Index exceeds 1,800 is considered to be
A) competitive.
B) not competitive.
C) moderately competitive.
D) purely competitive.
E) either a monopoly or monopolistic competition.
53) When the Herfindahl-Hirschman Index for an industry is
A) very small, the industry can be perfectly competitive.
B) very large, the industry can be perfectly competitive.
C) 10,000, the industry is perfectly competitive.
D) very small, the industry can be a monopoly.
E) above 5,000, the industry is considered not very competitive, and when it is below 5,000, the industry is considered very competitive.
54) If there are four firms in an industry with market shares of 50 percent, 40 percent, 5 percent, and 5 percent, the Herfindahl-Hirschman Index is
A) 100.
B) 4150.
C) 25.
D) 3450.
E) undefined because there are not 50 firms in the industry.
55) What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent, 15 percent, 15 percent, and 8 percent?
A) 100
B) 4,358
C) 111,600
D) 2,822
E) 6,200
56) The three largest firms in an industry have market shares of 40 percent, 30 percent, and 2 percent. The remaining 47 firms in the industry each have a market share of 1 percent. The Herfindahl-Hirschman Index (HHI) for this industry is ________.
A) 2,551
B) 5,184
C) 24,061
D) 10,000
E) 3,013
57) Suppose there are 7 firms in the candy industry with the market shares shown above. What is the HHI for the industry?
A) 1850
B) 2000
C) 6400
D) 100
E) 20
Firm
Market Share (percent)
Firm W
30
Firm X
20
Firm Y
10
Firm Z
5
58) A market has 4 firms in it. The market shares are in the table above. The table represents a(n) ________ market because its ________.
A) competitive; Herfindahl-Hirschman Index (HHI) equals 1425
B) competitive; four-firm concentration ratio equals 65 percent
C) uncompetitive; Herfindahl-Hirschman Index (HHI) equals 65 percent
D) perfectly competitive; Herfindahl-Hirschman Index (HHI) is less than 1500
E) uncompetitive; four-firm concentration ratio exceeds 60 percent
59) A market is considered competitive if the Herfindahl-Hirschman Index (HHI) is ________ and its four-firm concentration ratio is ________.
A) high; high
B) high; low
C) low; high
D) low; low
E) between 30 percent and 70 percent; greater than 5,000
60) The U.S. Justice Department
A) scrutinizes any merger of firms in a market in which the four-firm concentration exceeds 25 percent.
B) uses only the Herfindahl-Hirschman Index when considering whether to challenge a merger.
C) is likely to challenge a merger if the Herfindahl-Hirschman Index exceeds 1800.
D) Answers A and B are correct.
E) Answers B and C are correct.
