**Table: Total Revenue of Firms in an Industry**| Firm | Total Revenue ||---------|---------------|| Firm A | $45,000 || Firm B | $35,000 || Firm C | $50,000 || Firm D | $10,000 || Firm E | $60,000 |**Task: Calculate Herfindahl's Index**Use the method described in the slides to calculate the Herfindahl's Index. The resulting value should be between 0 and 1. Herfindahl's Index measures the concentration of firms in an industry, providing insights into competitiveness and market dominance. To calculate it, square the market share of each firm, sum these squares, and express the result as a fraction of 1.

In a market, the Herfindahl model is the when that is used to determine the market concentration and competitiveness.The formula for Herfindahl model is: =S12+S22+S32+......+Sn2 Where S is the market share of a firm. Here, total sales would be: =$45,000+$35,000+$50,000+$10,000+$60,000 =$200,000 According to the given information, Herfindahl model would be: =(22.5%)2+(17.5%)2+(25%)2+(5%)2+(30%)2 =506.25+306.25+625+25+900 =2,362.5

Business

Economics

Consider an industry with that contains the following firms Total Revenue Firm A $45,000 Firm B $35,000 Firm C $50,000 Firm D $10,000 Firm E $60,000 Calculate Herfindahl's Index. Use the method described in the slides (i.e., the number should be between 0 and 1)

Consider an industry with that contains the following firms Total Revenue Firm A $45,000 Firm B $35,000 Firm C $50,000 Firm D $10,000 Firm E $60,000 Calculate Herfindahl's Index. Use the method described in the slides (i.e., the number should be between 0 and 1)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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