If there are two firms in an industry and each has 50 percent market share, then the Herfindahl-Hirschman Index equals
A) 2,500.
B) 2,800.
C) 5,000.
D) 6,600.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For two firms each with a 50 percent market share, the calculation is (50^2 + 50^2) = 2500 + 2500 = 5000.

If There Are Two Firms in an Industry and Each