Question

A student figured out that the HHI for an industry was 15,000. What is the proper conclusion? Multiple Choice The market is close to perfectly competitive or monopolistically competitive. There is free entry in the market. The market is monopolistic. The student made some computational errors.

Answer 1

A student figured out that the HHI for an industry was 15,000.The Proper conclusion is The student made some computational errors.

Explanation:

The term “HHI” stands for the  Herfindahl–Hirschman Index. This index is used to  measure the market concentration.

It is calculated by squaring the market share of each  competing firm  of the market and then adding all  the result.

The  markets in which  HHI is in between 1,500 and 2,500 points are  said to be moderately concentrated, while on the other hand  markets in which the HHI is in beyond of 2,500 points are considered to be  highly concentrated.

So we can say that

A student figured out that the HHI for an industry was 15,000.The Proper conclusion is The student made some computational errors.