The square of the percentage market share of each firm summed over the 50 largest firms in a market is the
A) fifty-firm concentration ratio.
B) elasticity of supply value.
C) elasticity of demand value.
D) Herfindahl-Hirschman Index.
E) four-firm concentration ratio.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a commonly used measure of market concentration that is calculated by summing the square of the percentage market share of each firm in a market. The HHI ranges from 0 to 10,000, with higher scores indicating greater concentration in the market. The 50 largest firms in a market are typically used to calculate the HHI, making it the correct choice in this scenario.

The Square of the Percentage Market Share of Each Firm