The correct ranking of the four basic market structures from low (Herfindahl-Hirschaman Index) HHI to high HHI is

Question

Quizplus · Accepted Answer

The HHI measures market concentration, so the market structures with fewer firms will have a higher concentration and thus a higher HHI. Monopoly has the highest concentration and thus the highest HHI, followed by oligopoly, monopolistic competition, and perfect competition. Therefore, the correct ranking from low HHI to high HHI is perfect competition, monopolistic competition, oligopoly, and monopoly, which is represented by choice C.

The Correct Ranking of the Four Basic Market Structures from Low