Suppose there are 5 makers of tablet computers with market shares of 80%, 5%, 5%, 5%, and 5% respectively. The HHI is

Question

Quizplus · Accepted Answer

The HHI is calculated by squaring the market share of each firm and summing them up. 
HHI = (0.80)^2 + (0.05)^2 + (0.05)^2 + (0.05)^2 + (0.05)^2 = 0.655
Since the HHI is greater than 0.18 (which indicates a high level of concentration), the market would be considered concentrated. Therefore, the best choice is C, which is the only option indicating a high HHI value.

Suppose There Are 5 Makers of Tablet Computers with Market