Question

The Herfindhahl Hirschman index is used to

	measure the future earning of a perfect competitive firm.
	measure the market share of a potential merger among oligopolistic firms.
	measure the market share of a natural monopoly.
	measure the production cost of an oligopoly.
	measure the production costs of a perfect competitive firm

Ford hires resources for its assembly unit in Mexico. The Ford will recruit resources to the point where

	the price of unit output equals the additional revenue that an extra unit of output produces.
	its total cost equals its total revenue.
	the marginal cost of an additional unit of resource equals the marginal revenue product of that resource.
	the price of unit output equals the marginal cost of the last unit of output.
	the average variable cost of production equals the wage rate.

Answer 1

The HHI index is used to measure what amount of competition that exist in the market using the market shares and if there is any potential merger that is taking place it can get to identify the total share and change in the competition levels of that industry.

Therefore (b) measure the market share of a potential merger among oligopolistic firms

The maximum profit condition is when the marginal revenue is equal to the marginal cost and at that point the firm will produce and even in this case Ford hires resources according to that.

Therefore(c) the marginal cost of an additional unit of resource equals the marginal revenue product of that resource is the answer