The Herfindahl-Hirschman index is _____ for three firms with market shares of 45%, 35%, and 20%, respectively.
A) 100
B) 1000
C) 3,650
D) 10,000

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 three firms with market shares of 45%, 35%, and 20%, respectively, the calculation is (45^2) + (35^2) + (20^2) = 2025 + 1225 + 400 = 3650.

The Herfindahl-Hirschman Index Is _____ for Three Firms with Market