What does the Herfindahl-Hirschman Index value near zero imply about the market?
A)Monopoly
B)Perfect competition
C)Monopolistic competition
D)Oligopoly

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) measures the level of competition in a market. A value near zero implies perfect competition, where no individual seller has market power and prices are determined by market forces. Higher values of HHI indicate a greater concentration of market power among a few large firms, with values above 2500 indicating high market concentration and the potential for market power. Therefore, a value near zero corresponds to perfect competition.

What Does the Herfindahl-Hirschman Index Value near Zero Imply About