Among the following markets,the market with _____ is likely to have the highest Herfindahl-Hirschman Index (HHI).

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration, and it increases both as the number of firms decreases and as the disparity in size between those firms increases. Therefore, a market with five firms of widely different sizes (option C) is likely to have the highest HHI because it combines a relatively small number of firms with significant size disparity among them.

Among the Following Markets,the Market with _____ Is Likely to Have