-Which of the following statements about the Herfindahl-Hirschman Index is correct? I. It is the square of the percentage market share of each firm summed over the largest 50 firms (or summed over all the firms if there are fewer than 50) in a market.
II) A small index is indicative of a high degree of competition.
III) The index is used to measure the degree of competition.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market shares of all firms in the market, up to 50 firms. A smaller HHI indicates more competition, and the index is used to measure market concentration and competition.

-Which of the Following Statements About the Herfindahl-Hirschman Index Is