The Herfindahl-Hirschman Index is one factor used to determine whether a merger between two firms should be allowed. Which of the following statements regarding the value of the Index for a given industry is true?
A) If a merger would result in an Index value less than 1,500, the merger would not be challenged.
B) If a merger would result in an Index value of 1,500 or more, the industry would be considered a monopoly and the merger would be challenged.
C) If a merger resulted in an Index of between 1,500 and 2,500, and the HHI increased by more than 100 points, the industry would be considered competitive and the merger would not be challenged.
D) If a merger would increase the Index by 100, the industry would be considered a monopoly and the merger would be challenged.
Answer: A
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