If a monopoly can produce a good at zero marginal cost,then its Lerner Index is
A) zero.
B) one.
C) infinity.
D) undetermined.

Name: If a monopoly can produce a good at zero marginal cost,then its Lerner Index is A) zero. B) one. C) infinity. D) undetermined.
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Question

Quizplus · Accepted Answer

The Lerner Index measures a firm's market power and is calculated as (Price - Marginal Cost) / Price. If the marginal cost is zero, the index becomes Price / Price, which equals one.

If a Monopoly Can Produce a Good at Zero Marginal