The Herfindahl-Hirschman Index is used as a guideline to determine if a market is competitive or concentrated. Calculate the index value for each market described below

a. 100 firms, each of which produces 1 per cent of market output
b. 50 firms, each of which produces 2 per cent of market output
c. 25 firms, each of which produces 4 per cent of market output
d. 20 firms, each of which produces 5 per cent of market output
e. 10 firms, each of which produces 10 per cent of market output
f. 5 firms, each of which produces 20 per cent of market output
g. 2 firms, each of which produces 50 per cent of market output


a. 100 × 1 = 100
b. 50 × 4 = 200
c. 25 × 16 = 400
d. 20 × 25 = 500
e. 10 × 100 = 1,000
f. 5 × 400 = 2,000
g. 2 × 2,500 = 5,000

Economics

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