$$\begin{array}{l}
\begin{array} { l l r }
\text { Pool Sweeper } &\text { Output } &\text { Market share } \
\text { Producer }&\text { (Revenue) }&\text { (percent) }\
\hline \text { North Star } & \$ 20,000 &\_\_\_\_\_\
\text { Hurricane } & \$ 16,000 &\_\_\_\_\_\
\text { Blue Lagoon } & \$ 2,000 &\_\_\_\_\_\
\text { Clean Sweep } & \$ 2,000&\_\_\_\_\_\
\end{array}
\end{array}$$
Table 25.2 Refer to Table 25.2.Assume there are only four firms in the pool sweeper industry.What is the Herfindahl-Hirschman Index for this industry?
A) 2,500.
B) 50.
C) 4,150.
D) 4,125.

Question

$$\begin{array}{l}
\begin{array} { l l r } 
\text { Pool Sweeper } &\text { Output } &\text { Market share } \
\text { Producer }&\text { (Revenue) }&\text { (percent) }\
\hline \text { North Star } & \$ 20,000 &\_\_\_\_\_\
\text { Hurricane } & \$ 16,000 &\_\_\_\_\_\
\text { Blue Lagoon } & \$ 2,000 &\_\_\_\_\_\
\text { Clean Sweep } & \$ 2,000&\_\_\_\_\_\
\end{array}
\end{array}$$
Table 25.2 Refer to Table 25.2.Assume there are only four firms in the pool sweeper industry.What is the Herfindahl-Hirschman Index for this industry?
A) 2,500.
B) 50.
C) 4,150.
D) 4,125.

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market share percentages of all firms in the industry. First, we need to calculate the total market revenue, which is $20,000 + $16,000 + $2,000 + $2,000 = $40,000. Next, we calculate each firm's market share: North Star = 50% ($20,000/$40,000), Hurricane = 40% ($16,000/$40,000), Blue Lagoon = 5% ($2,000/$40,000), Clean Sweep = 5% ($2,000/$40,000). Then, we square each market share and sum them: (50^2) + (40^2) + (5^2) + (5^2) = 2500 + 1600 + 25 + 25 = 4150.

Table 252 Refer to Table 25