[amp_mcq option1=”Both A and B” option2=”$$\\frac{{P – mc}}{P}$$” option3=”$$\\frac{1}{E}$$” option4=”None of the above” correct=”option2″]<\/p>\n
The correct answer is B. Lerner’s index of monopoly power is $$\\frac{{P – mc}}{P}$$.<\/p>\n
Lerner’s index of monopoly power is a measure of the market power of a firm. It is calculated as the ratio of the difference between the price of a good and its marginal cost to the price of the good. A higher Lerner index indicates that a firm has more market power.<\/p>\n
The Lerner index is a useful tool for analyzing the market power of firms in different industries. It can also be used to predict the effects of government policies on market power.<\/p>\n
Option A is incorrect because it is not a measure of market power. Option C is incorrect because it is the elasticity of demand. The elasticity of demand is a measure of how responsive consumers are to changes in price. A higher elasticity of demand indicates that consumers are more sensitive to changes in price, and therefore have more bargaining power.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Both A and B” option2=”$$\\frac{{P – mc}}{P}$$” option3=”$$\\frac{1}{E}$$” option4=”None of the above” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-58462","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n