Consider Ford in the early days of the automobile industry. After the introduction of the Model T in 1908, Ford dominated the U.S. auto market, effectively operating as a monopoly for some time. The company’s revolutionary assembly line production methods allowed it to lower costs significantly, enabling mass production of affordable vehicles. Suppose we model the demand for Model Ts at the time and estimate the marginal cost based on historical data. Answer the following questions using the demand curve and cost structure provided. Ford faced an inverse demand curve P=200-Q and a marginal cost MC=10. The Lerner Index is a measure of a firm's market power. Fundamentally, it compares how distant price is from marginal cost, which would be the competitive price. That is, it indicates how much a firm can mark up its price above marginal cost in percent terms - the share of the price corresponding to market power. It is defined as: 𝐿 = 𝑃 − 𝑀 𝐶 𝑃 The Lerner Index ranges from 0 to 1, with zero corresponding to perfect competition (i.e. P = MC) and any number approaching 1 corresponding to greater market power, meaning the firm can charge a price significantly above marginal cost. What is approximately the Lerner index in this market?  单项选择题

登录即可查看完整答案

我们收录了全球超50000道真实原题与详细解析,现在登录,立即获得答案。

更多留学生实用工具

加入我们,立即解锁 海量真题独家解析,让复习快人一步!