method of measuring the extent of a firm's market power is

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The Lerner index and price elasticity of demand are both commonly used methods to measure a firm's market power. The Lerner index measures the extent of a firm's market power by calculating the difference between the price the firm charges and its marginal cost, divided by the price. A higher value indicates a greater degree of market power. Price elasticity of demand, on the other hand, measures how sensitive consumers are to changes in the price of the firm's product. A lower price elasticity of demand indicates that consumers are less sensitive to price changes, which can indicate greater market power for the firm. Income elasticity of demand is not necessarily a measure of market power, as it only reflects how changes in consumers' income affect their demand for the firm's product.

Method of Measuring the Extent of a Firm's Market Power