$\begin{array}{lr}
\begin{array}{c}
\text { Pool Sweeper } \
\text { Producer }
\end{array} & \begin{array}{c}
\text { Output } \
\text { (Revenue) }
\end{array}
& \begin{array}{c}
\text {Market Share}\
\text {(Percent)} \
\end{array} \
\text { North Star } & \$ 20,000 &\underline{\quad\quad}\
\text { Hurricane } & \$ 16,000 &\underline{\quad\quad}\
\text { Blue Lagoon } & \$ 2,000 &\underline{\quad\quad}\
\text { Clean Sweep } & \$ 2,000&\underline{\quad\quad}
\end{array}$

$\text { Table } 25.2$ 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

$\begin{array}{lr}
\begin{array}{c}
\text { Pool Sweeper } \
\text { Producer }
\end{array} & \begin{array}{c}
\text { Output } \
\text { (Revenue) }
\end{array} 
 & \begin{array}{c}
 \text {Market Share}\
 \text {(Percent)} \
\end{array} \ 
 \text { North Star } & \$ 20,000 &\underline{\quad\quad}\
\text { Hurricane } & \$ 16,000 &\underline{\quad\quad}\
\text { Blue Lagoon } & \$ 2,000 &\underline{\quad\quad}\
\text { Clean Sweep } & \$ 2,000&\underline{\quad\quad}
\end{array}$

$\text { Table } 25.2$  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 squaring the market share of each firm competing in the market and then summing the resulting numbers. First, calculate the total market revenue: $20,000 (North Star) + $16,000 (Hurricane) + $2,000 (Blue Lagoon) + $2,000 (Clean Sweep) = $40,000. Next, calculate each firm's market share (as a percentage), square it, and sum those squares:- North Star: $(20,000 / 40,000) \times 100 = 50\%$, $50^2 = 2500$- Hurricane: $(16,000 / 40,000) \times 100 = 40\%$, $40^2 = 1600$- Blue Lagoon: $(2,000 / 40,000) \times 100 = 5\%$, $5^2 = 25$- Clean Sweep: $(2,000 / 40,000) \times 100 = 5\%$, $5^2 = 25$Summing these squares: $2500 + 1600 + 25 + 25 = 4150$.

Table 25.2\text { Table } 25.2 Table 25.2 Refer to Table 25

$\text { Table } 25.2$ Refer to Table 25