Which of the following markets would have the highest Herfindahl index? A market with
A)ten firms of widely different sizes
B)ten firms of approximately the same size
C)five firms of widely different sizes
D)five firms of approximately the same size
E)eight firms exactly the same size

Question

Quizplus · Accepted Answer

The Herfindahl index measures market concentration. A market with fewer firms and more disparity in size (like five firms of widely different sizes) will have a higher Herfindahl index, indicating higher concentration.

Which of the Following Markets Would Have the Highest Herfindahl