Discuss the advantages of the Herfindahl-Hirschman Index compared with the four-firm concentration ratio
Unlike the four-firm concentration ratio, HHI takes into account data on a much larger percentage of the firms in the market than just the top four. HHI calculation automatically magnifies the weight assigned to the market shares of the larger firms, because the square of a larger number is disproportionately larger than the square of a smaller number. This effect is considered desirable, because these larger firms are the reason the government worries about monopoly power in the market under consideration. It also explains why the HHI works as a measure of concentration. The HHI number rises when concentration grows.
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If the demand curve for desktop computers shifts rightward and at the same time the supply curve shifts leftward, then
A) the equilibrium price definitely rises. B) the equilibrium price definitely falls. C) the equilibrium price definitely remains the same. D) the equilibrium quantity definitely increases. E) More information is needed to determine the effect on the equilibrium price.
Most goods in the economy are
a. club goods. b. common resources. c. public goods. d. private goods.
If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates, the result will likely be a(n) _______________ in housing prices
A) lower; lower; increase B) higher; higher; increase C) lower; higher; decrease D) higher; lower; decrease
Purchasing power parity means that
A. P = enom / PFor. B. P = PFor. C. enom = mc2. D. enom = PFor / P.