Asked by Kimberly Carter on May 11, 2024
Verified
Corporate concentration can be measured by
A) only the concentration ratio.
B) only the Herfindahl-Hirschman index.
C) both the concentration ratio and the Herfindahl-Hirschman index.
D) neither the concentration ratio nor the Herfindahl index.
Corporate Concentration
The degree to which a small number of firms control a large market share of the total output or sales within an industry.
Herfindahl-Hirschman Index
A measure of market concentration to evaluate the competitive landscape, calculated by summing the squares of the market shares of all firms in the industry.
- Identify the differences in how concentration ratios and the Herfindahl-Hirschman Index assess the concentration of markets.
Verified Answer
DG
Desmond GrenardoMay 16, 2024
Final Answer :
C
Explanation :
Corporate concentration can be measured by both the concentration ratio and the Herfindahl-Hirschman index. The concentration ratio measures the market share of the largest firms in an industry, while the Herfindahl-Hirschman index takes into account the market share of all the firms in the industry. Using both measures provides a more complete picture of the level of concentration in the industry.
Learning Objectives
- Identify the differences in how concentration ratios and the Herfindahl-Hirschman Index assess the concentration of markets.