An industry consists a firm which has sells its product for $30 and has a marginal cost of $18. Calculate the Lerner index for this firm? What it its mark up factor?
Select one:
A. Lerner Index = 0.6 and Mark up = 2.5
B. Lerner Index = 0.4 and Mark up = 1.67
C. none of the answers are correct
D. Lerner Index = 0.4 and Mark up = 1.67
E. Lerner Index = 1.67 and Mark up = 0.4
An industry consists a firm which has sells its product for $30 and has a marginal...
5. (15 points) A firm with market power sells its product for $9/unit, and its marginal cost is MC per unit. (7 pts)(a) What is this firm's Lerner Index? $6 (8 pts)(b) Beginning with the way we write marginal revenue in terms of market price, show mathematically how we can obtain the formula for the Lerner Index. Explain what range of values the LI can take, and which value indicates more market power
5. (15 points) A firm with market...
Problem 07-04 (algo) A firm has $2,200,000 in sales, a Lerner index of 0.58, and a marginal cost of $45, and competes against 800 other firms in its relevant market. Instruction: Enter your responses rounded to two decimal places. a. What price does this firm charge its customers? $ ces b. By what factor does this firm mark up its price over marginal cost?
A firm has $40 million in sales, a lerner index of .45, and a marginal cost of $25, and competes against 200 other firms inits relevant market. a.) What price does this firm charge its customers? b.) By what factor does this firm markup it price or marginal cost?
Exercise 5 An industry consists of two firms. The demand function for the product of firm i is qí = 24-5Pi+2pj. The marginal cost of production for each firm is zero. For what values of the discount factor will grim punishment strategies-with reversion to Bertrand-Nash prices-support a collusive agree- ment to marimize joint profits?
1. An increase in the supply of labor, the variable factor of production, will cause a monopsonist's: a. marginal revenue product curve to shift up b. marginal revenue product curve to shift down arginal factor cost curve to shift up marginal factor cost curve to shift down ARP e. both "a" and "c" are correct answers f. both "b" and "c" are correct answers g. both "a" and "d" are correct answers h. both "b" and "d" are correct answers...
A homogeneous good industry is composed of 3 firms. You are given the following information on output, price and marginal cost of each firm: q, 200 q2-500 93100 p- 50 41.7 c2 29.2 c3 45.8 Remember that for each firm where α, is the market share of firm i and η is the price elasticity of demand. a)Calculate the 2-firm concentration ratio. b)Calculate the Herfindahl index c) Calculate the number equivalent. d) Calculate the Lerner index of ach firm. e...
Consider an industry where demand has constant price elasticity and firms compete in output levels. In an initial equilibrium, both firms have the same marginal cost, c. Then Firm 1, by investing heavily in R&D, manages to reduce its marginal cost to c’ < c; a new equilibrium takes place. (a) What impact does the innovation have on the values of H and L? (b) What impact does the innovation have on consumer welfare? L: Lerner index H: herfil index
Suppose a firm purchases labor in a competitive labor market and sells its product in a competitive product market. The firm's elasticity of demand for labor is -0.4. Suppose the wage increases by 5 percent. What will happen to the amount of labor hired by the firm? What will happen to the marginal productivity of the last worer hired by the firm?
Suppose that a price-taker firm has a marginal cost function given by: MC 30+0.5q. The firm could join a cartel in its industry and agree to a quota of 5 units. The collusion drives the price of the good from $35.91 to $70.00. Calculate the producer surplus of this firm when they produce the quota. (Do not enter a "$" sign in your response. Round to the nearest two decimal places if necessary.) Answer: Check
12. Firm Z is a monopolist that sells its output at price $40/unit. If Firm Z's marginal cost of production is $32/unit, use the mark-up formula to find the elasticity of demand being faced by Firm Z. (Don't forget to include a minus sign in your answer!)