The Herfindahl index is calculated by:
A) adding the squared value of the market shares of all the firms in the industry.
B) multiplying the squared value of the market shares of all the firms in the industry.
C) adding the percentage of industry output produced by the largest four firms.
D) adding the percentage of industry output produced by the largest eight firms.

Question

Quizplus · Accepted Answer

The Herfindahl index is calculated by summing the squares of the market shares of all firms in the industry, which provides a measure of market concentration.

The Herfindahl Index Is Calculated By