-The Herfindahl-Hirschman Index Is Used as a Guideline to Determine

question 150

Essay

-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

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Definitions:

Operating Expenses

The costs associated with the day-to-day operations of a business, not including the cost of goods sold.

Fixed Assets

Long-term tangible assets used in the operations of a business that are not expected to be consumed or converted into cash within a year.

Trademark

A trademark is a recognizable sign, design, or expression which identifies products or services of a particular source from those of others.

Patent

Legal protection granted by the government to an inventor, giving them exclusive rights to use, produce, and sell their invention for a certain period of time.