Asked by Elizabeth McGee on Jul 02, 2024
Verified
The Herfindahl index for a pure monopolist is:
A) 100.
B) 10,000.
C) 100,000.
D) 10.
Herfindahl Index
An index reflecting the scale of companies compared to the entire sector and a sign of the level of competitive activity present.
Pure Monopolist
A market structure where a single firm is the sole producer and seller of a product or service without close substitutes, giving it significant market power.
Market Shares
The percentage of an industry's total sales that is earned by a particular company over a specified time period, indicating the company's size or presence in the market.
- Comprehend the role of the Herfindahl index in evaluating market concentration and its consequences for competitive environment.
Verified Answer
CC
Caroline CapaprisJul 02, 2024
Final Answer :
B
Explanation :
The Herfindahl index measures market concentration, with a range from close to zero (perfect competition) to 10,000 (monopoly). Since a pure monopolist is the only producer in the market, it has 100% market share, resulting in a Herfindahl index of 10,000. Therefore, the correct choice is B.
Learning Objectives
- Comprehend the role of the Herfindahl index in evaluating market concentration and its consequences for competitive environment.