-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The HHI in industry I is
A) 20 percent
B) 20
C) 400
D) 2,000
E) 80 percent

Question

-In Exhibit L-2, the table shows the market shares of five firms that operate in three different industries. The HHI in industry I is
A) 20 percent 
B) 20 
C) 400 
D) 2,000 
E) 80 percent

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 industry I, assuming the market shares are given in percentages for firms (let's say 10%, 20%, 30%, 25%, 15% as an example), the calculation would be: $10^2 + 20^2 + 30^2 + 25^2 + 15^2 = 100 + 400 + 900 + 625 + 225 = 2250$. However, without the specific market shares provided in the question, the exact calculation cannot be done. The correct answer choice, D (2,000), suggests a scenario where the market shares, when squared and summed, approximate to 2,000, indicating a moderately concentrated market. This is a conceptual explanation; the exact figures would depend on the actual market shares provided in the exhibit.

-In Exhibit L-2, the Table Shows the Market Shares of Five