The Herfindahl index for an industry is 2,550. Which of the following sets of market shares and industry with four firms would produce such an index?

A) 20, 20, 30, and 30
B) 25, 25, 25, and 25
C) 20, 25, 25, and 30
D) 10, 20, 30, and 40

Question

Matthew Hoffmann · Accepted Answer

Final Answer : C, Explanation :   The Herfindahl index is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For option C, the calculation is   2 0 2 + 2 5 2 + 2 5 2 + 3 0 2 = 400 + 625 + 625 + 900 = 2550 20^2 + 25^2 + 25^2 + 30^2 = 400 + 625 + 625 + 900 = 2550 2 0 2 + 2 5 2 + 2 5 2 + 3 0 2 = 400 + 625 + 625 + 900 = 2550  , which matches the given Herfindahl index.

The Herfindahl index for an industry is 2,550. Which of the following sets of market shares and industry with four firms would produce such an index?

A) 20, 20, 30, and 30
B) 25, 25, 25, and 25
C) 20, 25, 25, and 30
D) 10, 20, 30, and 40

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The Herfindahl index for an industry is 2,550. Which of the following sets of market shares and industry with four firms would produce such an index?A) 20, 20, 30, and 30B) 25, 25, 25, and 25C) 20, 25, 25, and 30D) 10, 20, 30, and 40

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Related questions

The Herfindahl index for an industry is 2,550. Which of the following sets of market shares and industry with four firms would produce such an index?

A) 20, 20, 30, and 30
B) 25, 25, 25, and 25
C) 20, 25, 25, and 30
D) 10, 20, 30, and 40