Suppose there are 11 automakers. The top three have 20% of the market each, and the remaining eight six divide remaining market share evenly. The HHI is

Question

Quizplus · Accepted Answer

To calculate HHI, we first need to find the market share of each automaker. The top three automakers have a 20% market share each, so their combined market share is 60%. The remaining eight automakers split the remaining 40%, so each has a market share of 5%.

Now, we can calculate the HHI using the formula:

HHI = (20^2 + 20^2 + 20^2 + 8 x 5^2)

Simplifying, we get:

HHI = 1400

Therefore, the best choice is C, with an HHI of 1400. This indicates a moderately concentrated market, with a significant degree of competition among the 11 automakers.

Suppose There Are 11 Automakers