$$\begin{array} { | c | r | }
\hline \text { Bank } & \text { Asset Size } \
\hline 1 & \text { \$100 million } \
\hline 2 & \text { \$200 million } \
\hline 3 & \text { \$500 million } \
\hline
\end{array}$$
-What is the market's Herfindahl Hirschman Index (HHI)?
A)4,688.
B)3,600.
C)548.
D)8.
E)0.

Question

$$\begin{array} { | c | r | } 
\hline \text { Bank } & \text { Asset Size } \
\hline 1 & \text { \$100 million } \
\hline 2 & \text { \$200 million } \
\hline 3 & \text { \$500 million } \
\hline
\end{array}$$
-What is the market's Herfindahl Hirschman Index (HHI)?
A)4,688.
B)3,600.
C)548.
D)8.
E)0.

Quizplus · Accepted Answer

The HHI is calculated as the sum of the squared market shares of each firm in the market. In this case, the market shares are:Bank 1: 100/800 = 0.125Bank 2: 200/800 = 0.25Bank 3: 500/800 = 0.625The HHI is then calculated as:HHI = 0.125^2 + 0.25^2 + 0.625^2 = 0.4688Therefore, the correct answer is A) 4,688.

-What Is the Market's Herfindahl Hirschman Index (HHI)? A)4,688

-What Is the Market's Herfindahl Hirschman Index (HHI)?
A)4,688