If an industry has an HHI of 2,500,the market structure is that of
A) a monopoly.
B) monopolistic competition.
C) an oligopoly.
D) perfect competition.
E) either monopoly or perfect competition, depending on the existence or absence of barriers to entry.

Question

Quizplus · Accepted Answer

An HHI (Herfindahl-Hirschman Index) of 2,500 indicates a moderately concentrated market, which is commonly found in an oligopoly market structure. In an oligopoly, there are typically only a few large companies or firms that dominate the industry and have significant control over prices and output levels. This differs from a monopoly, where there is only one dominant player, and perfect competition, where there are many small firms with no market power. Therefore, the best choice is C, an oligopoly.

If an Industry Has an HHI of 2,500,the Market Structure