The smaller the value of the Lerner index,_____.
A)the greater the firm's monopoly power
B)the more price elastic the firm's supply curve
C)the greater the difference between marginal cost and marginal revenue
D)the smaller the difference between marginal cost and price

Question

Quizplus · Accepted Answer

The Lerner index measures the degree of a firm's market power as the difference between price and marginal cost relative to price. A smaller Lerner index indicates a smaller gap between price and marginal cost, suggesting less market power.

The Smaller the Value of the Lerner Index,_____