Explanation Figure -1 illustrates the marginal cost, average total cost , average variable cost and average fixed cost at different levels of output. Figure -1 In Figure -1, the horizontal axis measures the quantity of output and the vertical axis measures cost. Option (d): The Herfindahl index (HHI) can be calculated as follows: HHI = ( ( Supply Firm 1 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 + ( Supply Firm 2 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 + ( Supply Firm 3 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 ) 1 , 800 = ( ( 5,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 + ( 3,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 + ( 2,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 ) 1 , 800 = ( ( 50 ) 2 + ( 30 ) 2 + ( 20 ) 2 ) 1 , 800 = 1 , 800 The calculated value is equal to 1,800. Thus, option ‘d’ is correct. Option (a): The Herfindahl index (HHI) can be calculated as follows: HHI = ( ( Supply Firm 1 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 + ( Supply Firm 2 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 + ( Supply Firm 3 ( Supply Firm 1 + Supply Firm 2 + Supply Firm 3 ) × 100 ) 2 ) 100 % = ( ( 5,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 + ( 3,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 + ( 2,000,000 ( 5 , 000 , 000 + 3 , 000 , 000 + 2 , 000 , 000 ) × 100 ) 2 ) 100 % = ( ( 50 ) 2 + ( 30 ) 2 + ( 20 ) 2 ) 100 % ≠ 1 , 800 The calculated value is not equal to 100%

Calculate Herfindahl index.

EBK ECONOMICS

21st Edition

ISBN: 8220106637173

Author: McConnell

Publisher: YUZU

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Chapter 14.2, Problem 1QQ

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Calculate Herfindahl index.

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Chapter 13, Problem 3P

Chapter 14.2, Problem 2QQ

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