ECONOM icr rk 8 Chapter 15 PreFinal Assignmu Question 7 of 1

ECONOM icr rk #8: Chapter 15 Pre-Final Assignmu… Question 7 (of 10) value 10.00 points Suppose the burrito market is divided as follows: Market Share(%) 10 Firm odoba Big City Burrito Consuelo\'s Burrito all others (20 firms a. What is the approximate Herfindahl index? Instructions: Round your answer to the nearest whole number. b. Based on this Herfindahl index calculation, how would you describe its m Instructions: Round your answer to the nearest whole number sufficiently competitive\" Type here to search

Solution

The herfindahl index is the sum of the squares of the market shares of each firm in the industry.

a) herfindahl index = 10² + 5² + 3² + 2² + 4² * 20

herfindahl index = 458

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b) The herfindahl index is less than 1000 which indicates the industry is unconcentrated or a competitive market place.