A firm has a marginal cost of $200 and charges a price of $500. The Lerner index for this firm is:
A. 0.50.
B. 1.50.
C. 0.60.
D. 0.20.
Answer: C
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A) demand for; demand for. B) supply of; supply of C) demand for; supply of D) supply of; demand for
Suppose our firm produces chartered business flights with capital (planes) and labor (pilots) in fixed proportion (i.e., one pilot for each plane)
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Answer the following statement true (T) or false (F)
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A. the average cost curve must be downward sloping. B. there may be collusion between firms. C. market demand must be unit elastic. D. This could never happen.