$~~~~~~~\text { Industry } X ~~~~~~~~~~~~~~~~~~~ \text { Industry } Y ~~~~~~~~~~~~~~~~ \text { Industry } Z\
\begin{array}{cccccc}
&\text { Market } && \text { Market } && \text { Market }\
\text { Firm } & \text { Share (\%) } & \text { Firm } & \text { Share (\%) } & \text { Firm } & \text { Share (\%) } \
1 & 25 & 1 & 30 & 1 & 30 \
2 & 20 & 2 & 20 & 2 & 30 \
3 & 15 & 3 & 15 & 3 & 15 \
4 & 10 & 4 & 15 & 4 & 10 \
5 & 10 & 5 & 10 & 5 & 10 \
6 & 10 & 6 & 5 & 6 & 5 \
7 & 10 & 7 & 5 & &
\end{array}$
-The highest Herfindahl-Hirschman index

Question

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. It can range from close to zero to 10,000. The higher the HHI, the higher the market concentration. For Industry X, Y, and Z, the HHI calculations are as follows:- Industry X: $25^2 + 20^2 + 15^2 + 10^2 + 10^2 + 10^2 + 10^2 = 2050$- Industry Y: $30^2 + 20^2 + 15^2 + 15^2 + 10^2 + 5^2 + 5^2 = 2050$- Industry Z: $30^2 + 30^2 + 15^2 + 10^2 + 10^2 + 5^2 = 2200$Industry Z has the highest HHI, indicating the highest level of market concentration among the three industries.

-The Highest Herfindahl-Hirschman Index A)is in Industry X

-The Highest Herfindahl-Hirschman Index
A)is in Industry X