The largest value the Herfindahl index can have is
A)100, which would indicate a monopoly
B)100 for firms equal in size
C)100, 000
D)10, 000, which would indicate a pure monopoly
E)infinity

Question

Quizplus · Accepted Answer

The Herfindahl index is calculated as the sum of the squares of the market shares of all firms in the industry, multiplied by 10,000. In the case of a pure monopoly, the index would be 10,000, as the single firm would have 100% market share (100^2 = 10,000).

The Largest Value the Herfindahl Index Can Have Is