Suppose there are 10 identical firms in an industry and each produces 10% of the total market sales. The HHI for this industry would indicate that the industry is:
A) competitive.
B) monopolistic.
C) oligopolistic.
D) Cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market shares of all firms in the industry. With 10 firms each having 10% market share, the HHI is 10*(10^2) = 1000, which indicates a competitive market.

Suppose There Are 10 Identical Firms in an Industry and Each