A firm's average cost is $20, and it charges a price of $20. The Lerner index for this firm is:
A. 0.20.
B. 0.33.
C. 0.50.
D. insufficient information.
Answer: D
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The self-correcting tendency of the economy means that falling inflation eventually eliminates:
A. exogenous spending. B. recessionary gaps. C. expansionary gaps. D. unemployment.
Suppose a monopoly is producing its profit-maximizing output level. Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output
As a result the monopolist will increase the price of its product to cover its higher cost. Indicate whether the statement is true or false
It is illegal for business to price discriminate when selling goods to other businesses unless
a. Price discounts are cost-justified b. Discounts are offered to meet competitors' price c. Both a and b d. It is not illegal for businesses to price discriminate
If there was an increase in the excise tax imposed on guitar suppliers, what would be the effect on the equilibrium price and quantity of guitars?
a. Price increases; quantity decreases b. Price decreases; quantity decreases c. Price increases; quantity increases d. Price decreases; quantity increases