A merger is being negotiated between two firms. The acquirer earns 70 percent of its revenues from chemicals and 30 percent from retail drugs. The target earns 30 percent of revenues from chemicals 30 percent from retail drugs, and 40 percent from cosmetics. Combined, the merged company would earn 70 percent of revenues from chemicals, 15 percent from retail drugs, and 15 percent from cosmetics.
What is the acquirer's Herfindahl Index (HI) before the merge?
A. 0.58
B. 0.48
C. 0.62
D. 0.54
E. 0.34