Author Question: If the four firms in an industry represented 40, 30, 20, and 10 of the market, respectively, what ... (Read 42 times)

jho37 · **on:** Jun 30, 2018

If the four firms in an industry represented 40, 30, 20, and 10 of the market, respectively, what would be the Herfindahl-Hirschman Index for this industry? What if the largest firm then divested into two equal sized companies?
a. 3,000 . 2,300.
b. 2,300; 3,000
c. 3,000 . 5,400
d. 2,300; 5,400

Question 2

Adverse selection can occur if:
a. high-risk persons insure themselves more heavily than low-risk persons.
b. high-risk persons claim coverage which cannot be borne by the insurers.
c. high-risk persons do not conceal information from the insurer.
d. high-risk persons make an effort to take less risk in the presence of an insurance cover.