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Author Question: What is the Herfindahl-Hirschman Index and what does it measure? What will be an ideal ... (Read 73 times)

Pineapplelove6

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on: Jun 29, 2018
What is the Herfindahl-Hirschman Index and what does it measure?
 
  What will be an ideal response?

Question 2

Price discrimination by a monopoly
 
  A) increases consumer surplus.
  B) decreases consumer surplus.
  C) increases the firm's profit.
  D) Both answers B and C are correct.


kristenb95

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The Herfindahl-Hirschman Index, or HHI, is an index used to measure the extent to which a market is dominated by a small number of firms. The HHI equals the sum of the squared percentage market shares of each of the 50 largest firms in the market. A monopoly will have a HHI of 10,000 whereas perfect competition will have a small HHI.

Answer to Question 2

D


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