The ______,a measure of market concentration,squares the market share of each firm in a market and adds them together for a final number.
A) Noerr-Pennington Index
B) Producer Price Index
C) Consumer Price Index
D) Herfindahl-Hirschman Index
E) Big Mac Index

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI), a measure of market concentration, squares the market share of each firm in the market and adds them together for a final number. For example, if there are five firms in the market, each with a 20% share, the final HHI is 2,000 points. If two of those firms merge, the HHI would rise to 2,800 points.

The ______,A Measure of Market Concentration,squares the Market Share of Each