The Lerner Index is
A) the ratio of the difference between price and marginal cost to price.
B) equal to (Price - MC)/Price.
C) a measure of market power.
D) All of the above.

Question

Quizplus · Accepted Answer

All three choices are true. The Lerner Index is a measure of a firm's monopoly power and is defined as the ratio of the difference between price and marginal cost to price. It is also commonly expressed as (Price - MC)/Price. Therefore, D ("All of the above") is the correct answer.

The Lerner Index Is