1)What is an Edgeworth box?

2)In a purely competitive market, the Herfindahl Index would have a value approaching:

a. 1

b. 100

c. 0

d. infinity

1)When the interaction between individuals in a market is depicted through graphs and box, it is known as Edgeworth box. The Edgeworth box contains quantity of goods depicted in the dimensions of the box. It shows the way individuals interact for trading goods in the market.it helps in determining equilibrium quantity and price in different markets.

2)

The correct option is c) 0.

The Herfindahl index value ranges from 0 to 1, where the value will increase with decreasing competition and the market reaches monopoly at 1 (lowest competition). At 0 index value, there will be a large number of smaller firms in the market which represents the purely competitive market.