An industry is made up of five firms.Three of the firms make up 20% of the total market sales,one firm makes up 25%,and the remaining firm makes up 15%.What is the HHI for this industry?

A) 100
B) 1,200
C) 2,050
D) 1,800

Question

summer schneiss · Accepted Answer

Final Answer : C, Explanation :  HHI = (s1)^2 + (s2)^2 + ... + (sn)^2where sn represents the market share of the nth firm.Calculating the HHI for this industry:HHI = (0.2)^2 + (0.2)^2 + (0.2)^2 + (0.25)^2 + (0.15)^2HHI = 0.04 + 0.04 + 0.04 + 0.0625 + 0.0225HHI = 0.1925Since the HHI is less than 1,800, it indicates that this industry is competitive. Therefore, the correct answer is C.

An industry is made up of five firms.Three of the firms make up 20% of the total market sales,one firm makes up 25%,and the remaining firm makes up 15%.What is the HHI for this industry?

A) 100
B) 1,200
C) 2,050
D) 1,800

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An industry is made up of five firms.Three of the firms make up 20% of the total market sales,one firm makes up 25%,and the remaining firm makes up 15%.What is the HHI for this industry?A) 100B) 1,200C) 2,050D) 1,800

Definitions

Learning Objectives

Learning Objectives

Related questions

An industry is made up of five firms.Three of the firms make up 20% of the total market sales,one firm makes up 25%,and the remaining firm makes up 15%.What is the HHI for this industry?

A) 100
B) 1,200
C) 2,050
D) 1,800