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What is the Herfindahl Index for an industry with market shares of 30%, 30%, 10%, 10%, 10%, and 10%?

a. 0.10
b. 0.36
c. 0.50
d. 1.00

1 Answer

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Final answer:

The Herfindahl-Hirschman Index (HHI) for the industry with market shares of 30%, 30%, 10%, 10%, 10%, and 10% is calculated as 0.22, which is not one of the provided multiple-choice options.

Step-by-step explanation:

The Herfindahl-Hirschman Index (HHI) is calculated by summing the squares of the market share of each firm within an industry. The market shares in the given industry are 30%, 30%, 10%, 10%, 10%, and 10%. To find the HHI for this industry, we square each market share and then sum them up:

  • (30%)² + (30%)² + (10%)² + (10%)² + (10%)² + (10%)²
  • (0.30)² + (0.30)² + (0.10)² + (0.10)² + (0.10)² + (0.10)²
  • 0.09 + 0.09 + 0.01 + 0.01 + 0.01 + 0.01
  • HHI = 0.22

The calculated HHI for this industry is 0.22, which means none of the provided options (a. 0.10 b. 0.36 c. 0.50 d. 1.00) apply to this scenario.

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