What is the market's Herfindahl-Hirschman Index (HHI)?
$\begin{array}{lccc}
\text {Bank }& \text { Asset Size}\
1&\$ 100 \text { million}\
2& \$ 200 \text { million}\
3&\$ 500 \text { million}\
\end{array}$

Question

What is the market's Herfindahl-Hirschman Index (HHI)? 
$\begin{array}{lccc}
  \text {Bank }&  \text { Asset Size}\
 1&\$ 100    \text { million}\
2& \$ 200   \text { million}\
3&\$ 500  \text {  million}\
\end{array}$

Quizplus · Accepted Answer

The HHI is calculated by squaring the market share of each firm and then summing the results. The total market size is $800 million. The market shares are 12.5%, 25%, and 62.5%. Squaring these and summing gives 156.25 + 625 + 3906.25 = 4687.5, rounded to 4688.

What Is the Market's Herfindahl-Hirschman Index (HHI) A)4,688 B)3,600

What Is the Market's Herfindahl-Hirschman Index (HHI) A)4,688
B)3,600