If there are four firms in a market and one has a 40 percent market share, one has a 25 percent market share, one has a 20 percent market share, and one has a 15 percent market share, the Herfindahl- Hirschman Index (HHI)in this market is_____ .
A)2,850
B)1,270
C)5,250
D)8,250

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm and then summing the results: (40^2) + (25^2) + (20^2) + (15^2) = 1600 + 625 + 400 + 225 = 2850.

If There Are Four Firms in a Market and One