The Herfindahl index is calculated by: (Points : 5) adding the squared value of

Question

The Herfindahl index is calculated by: (Points : 5)
adding the squared value of the market shares of all the firms in the industry.
multiplying the squared value of the market shares of all the firms in the industry.
adding the percentage of industry output produced by the largest four firms.
adding the percentage of industry output produced by the largest eight firms.


7. In December 2004, the oil producing nations of OPEC began reducing output to keep prices above $40 per barrel. In doing this, OPEC was acting as a monopoly even though there was more than one producer. OPEC is a: (Points : 5)
cartel.
price taker.
producer in a contestable market.
producer in a monopolistically competitive market.


8. The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a: (Points : 5)
horizontal demand curve and price equals marginal cost in equilibrium.
horizontal demand curve and price exceeds marginal cost in equilibrium.
downward-sloping demand curve and price equals marginal cost in equilibrium.
downward-sloping demand curve and price exceeds marginal cost in equilibrium.

Explanation / Answer

multiplying the squared value of the market shares of all the firms in the industry.

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