In a perfectly competitive market,the Herfindahl-Hirschman Index (HHI)
A)is small.
B)is usually greater than 5,000.
C)is greater than 1,000 but less than 2,000.
D)lies between 1,200 and 1,500.
E)is greater than 10,000.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many firms and no single firm has a dominant market share. Therefore, the HHI, which measures the degree of competition and market concentration based on the sum of the squared market shares of all the firms in the market, will be small. A smaller HHI indicates greater competition and less market power for individual firms.

In a Perfectly Competitive Market,the Herfindahl-Hirschman Index (HHI)