Suppose there are five firms in an industry. Their sales (that is, total revenue) are as follows: 1. Firm 1: 98 million. II. Firm 2: 46 million III. Firm 3: 46 million IV. Firm 4: 14 million V. Firm 5: 6 million The Herfindahl-Hirschman Index (HHI) for this industry is (Enter your response as an integer.) 3,312 5,312 4,312 2312

Suppose there are five firms in an industry. Their sales (that is, total revenue) are as follows: 1. Firm 1: 98 million. II. Firm 2: 46 million III. Firm 3: 46 million IV. Firm 4: 14 million V. Firm 5: 6 million The Herfindahl-Hirschman Index (HHI) for this industry is (Enter your response as an integer.) 3,312 5,312 4,312 2312

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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B.A measure called Herfindahl-Hirschman Index is used to measure the degree of competition in an industry. The HHI is the square of each firm's market share summed over the firms in the industry. (Where market share is the percentage of sales in the market accounted for by that firm). For example, if an industry contains only three firms and their market shares are 60%, 25%, and 15% then the HHI (by squaring each firm's share and summing them) is 4450. Some economists classify the market structures according to HHI scores. An HHI below 1,500 indicates astrongly competitive market, between 1,500 and 2,500 indicates a somewhat competitivemarket, and over 2,500 indicates an oligopoly. Given the information in the table, calculate the HHI in this industry. If yahoo and Bing were to merge, what would the HHI be? Search engine Market share Google 67% Bing 18 Yahoo! 11 Activate Windo Go to Settings to act Ask 3 AOL 1
.A measure called Herfindahl-Hirschman Index is used to measure the degree of competition in an industry. The HHI is the square of each firm’s market share summed over the firms in the industry. (Where a market share is the percentage of sales in the market accounted for by that firm). For example, if an industry contains only three firms and their market shares are 60%, 25%, and 15% then the HHI (by squaring each firm’s share and summing them) is 4450. Some economists classify the market structures according to HHI scores. An HHI below 1,500 indicates a strongly competitive market, between 1,500 and 2,500 indicates a somewhat competitive market, and over 2,500 indicates an oligopoly. Given the information in the table, calculate the HHI in this industry. If yahoo and Bing were to merge, what would the HHI be? Google 67% Yahoo 18 Bing 11 Ask 3 AOL 1
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