Which of the following values of the Lerner Index indicates the greatest amount of market power?
A)0.313.
B)0.375.
C)0.6.
D)0.625.

Question

Quizplus · Accepted Answer

The Lerner index is calculated as (P-MC)/P, where P is the market price and MC is the marginal cost. The higher the Lerner index, the greater the market power. 
Out of the given choices, option D has the highest Lerner index value of 0.625, which means the firm has the highest market power. Therefore, option D is the best choice.

Which of the Following Values of the Lerner Index Indicates