If there are only three firms in an industry with 50 percent, 40 percent, and 10 percent of the market, respectively, the Herfindahl Index is
A)40
B)100
C)200
D)33
E)4, 200

Name: If there are only three firms in an industry with 50 percent, 40 percent, and 10 percent of the market, respectively, the Herfindahl Index is A)40 B)100 C)200 D)33 E)4, 200
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Quizplus · Accepted Answer

The Herfindahl Index is calculated by summing the squares of the market shares of each firm. Here, (50^2) + (40^2) + (10^2) = 2500 + 1600 + 100 = 4200.

If There Are Only Three Firms in an Industry with 50