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A student has calculated the HHI of 22,167 for an industry. From this result we can conclude that: Multiple Choice this indus

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Answer #1

Student has made a computational error.

HHI (Herfindahl-Hirschman Index) is a measure of competition prevailing iin the market and is used to evaluate the market concentration. HHI is calculated as taking the squares of the market size of each firm in the industry and then taking the summation.

HHI ranges from 0 to 10000

A higher HHI indicates that the market is highly concentrated. So, option a is not correct.

HHI of 22167 is not possible as it ranges from 0 to 10000. So, option b is also not correct.

A higher HHI indicates that the market is monopolistically competitive. However, such a huge range of HHI is not possible to occur in any market place. So, option c is incorrect.

As HHI ranges from 0 to 10000, the student must have committed some computational error in the calculation that lead to out of range HHI of 22,167. So, this option d is correct.

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