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Suppose that there are two industries, A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The HHI for industry A is:

Respuesta :

Answer:

3200

Explanation:

The HHI is calculated by squaring the market share of each firm in the industry.

Market share = sales of a firm / total sales of firms in the industry

total sales of firms in the industry = 5 + 2 + 1 + 1 + 1 = 10

Market share of firm A = (5/10) x 100 = 50%

Market share of firm B = (2/10) x 100 = 20%

Market share of firm C, D, E = (1/10) x 100 = 10%

50² + 20² + 10² + 10²  + 10² = 3200

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