$~~~~~{ \text { Industry } \mathbf { X } } ~~~~~~~~~~~~~ { \text { Industry } \mathbf { Y } } \
\begin{array} { c c c c }
& \text { Market }& & { \text { Market } } \
\text { Firm } &\text { Share } & \text { Firm } & \text { Share } \
1 & .40 & 1 & .30 \
2 & .20 & 2 & .30 \
3 & .10 & 3 & .30 \
4 & .10 & 4 & .05 \
5 & .10 & 5 & .03 \
6 & .10 & 6 & .02
\end{array}$
-Which statement is true?

Question

$~~~~~{ \text { Industry } \mathbf { X } } ~~~~~~~~~~~~~ { \text { Industry } \mathbf { Y } } \
\begin{array} { c c c c } 
& \text { Market }& & { \text { Market } } \
\text { Firm } &\text { Share } & \text { Firm } & \text { Share } \
1 & .40 & 1 & .30 \
2 & .20 & 2 & .30 \
3 & .10 & 3 & .30 \
4 & .10 & 4 & .05 \
5 & .10 & 5 & .03 \
6 & .10 & 6 & .02
\end{array}$
-Which statement is true?

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 X: $HHI = 0.40^2 + 0.20^2 + 0.10^2 + 0.10^2 + 0.10^2 + 0.10^2 = 0.16 + 0.04 + 0.01 + 0.01 + 0.01 + 0.01 = 0.24$ or 2400 when expressed as per the usual convention (multiplying by 10,000).

-Which Statement Is True? A)Industry X Has a Herfindahl-Hirschman Index

-Which Statement Is True?
A)Industry X Has a Herfindahl-Hirschman Index