There are four firms in the cement industry in Petrovia.Firm A has a market share of 30 percent,Firm B has a market share of 20 percent,Firm C has a market share of 25 percent,and Firm D has a market share of 25 percent.The Herfindahl-Hirschman Index for the cement industry is ________.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm in the industry and summing those values. 
HHI = (30^2 + 20^2 + 25^2 + 25^2) = 2,550 
Since the HHI ranges from 0 to 10,000, a score below 1,500 signals an unconcentrated or competitive market, while a score above 2,500 indicates high concentration. Therefore, option C is the correct answer.

There Are Four Firms in the Cement Industry in Petrovia