How is the effective number of parties calculated, and what does it indicate?

How is the effective number of parties calculated, and what does it indicate?

• A. The total votes divided by the number of parties.
• B. The number of parties currently represented in the parliament.
• C. 1 divided by the sum of squared vote shares of each party; higher values indicate more fragmentation.
• D. The average vote share across parties.

Answer: (C)