A market in which the herfindahl-hirschman index is 1,000 is regarded by the federal trade commission as competitive
What is herfindahl-hirschman index?
- The Herfindahl-Hirschman Index, a widely used index of market concentration, is referred to as "HHI."
- The market share of each company engaged in market competition is squared before the resulting numbers are added to determine the HHI.
- When assessing market competition, one uses the Herfindahl-Hirschman Index (HHI). An HHI of 1,500 or less indicates a competitive market, 1,500 to 2,500 indicates a moderately concentrated market, and 2,500 or more indicates a highly concentrated market.
- The Herfindahl index measures a company's size in relation to the industry it operates in and serves as a gauge of how fiercely it is competing with other businesses.
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