Which of the following correctly describes a difference between the four-firm concentration ratio and the Herfindahl index?
A. The four-firm concentration ratio measures the degree of concentration among all but four firms in an industry, whereas the Herfindahl index measures the degree of concentration among all firms in an industry.
B. The Herfindahl index is equal to the sum of the squares of the market shares of all firms in the industry; the concentration ratio is the sum of the market shares of the largest four firms in the industry.
C. The Herfindahl index only considers domestic firms, while the concentration ratio only considers foreign firms.
D. The Herfindahl index is equal to the sum of the squares of the market shares of the largest four firms in the industry; the concentration ratio focuses on the relative percentages sales of all firms in the industry.
Which of the following correctly describes a difference between the four-firm concentration ratio and the Herfindahl index?
A. The four-firm concentration ratio measures the degree of concentration among all but four firms in an industry, whereas the Herfindahl index measures the degree of concentration among all firms in an industry.
B. The Herfindahl index is equal to the sum of the squares of the market shares of all firms in the industry; the concentration ratio is the sum of the market shares of the largest four firms in the industry.
C. The Herfindahl index only considers domestic firms, while the concentration ratio only considers foreign firms.
D. The Herfindahl index is equal to the sum of the squares of the market shares of the largest four firms in the industry; the concentration ratio focuses on the relative percentages sales of all firms in the industry.
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