Asked by
Arvionne Reliford
on Dec 04, 2024
Verified
The more elastic the demand facing a firm,
A) the higher the value of the Lerner index.
B) the lower the value of the Lerner index.
C) the less monopoly power it has.
D) the higher its profit.
Lerner Index
A measure of a firm's pricing power and market control, calculated as the difference between price and marginal cost, divided by price.
Elastic Demand
A situation where the quantity demanded of a good or service significantly changes in response to a change in its price.
- Recognize the relationship between demand elasticity, marginal revenue, and monopoly pricing strategies.
- Understand the concept of the Lerner index and its application in measuring monopoly power.
Verified Answer
CP
Learning Objectives
- Recognize the relationship between demand elasticity, marginal revenue, and monopoly pricing strategies.
- Understand the concept of the Lerner index and its application in measuring monopoly power.