Match the following: Price (P) and Marginal Cost (MC) Lerner’s Index of monopoly power (approximately)…
Lerner's index is \(L=(P-MC)/P\). The values are a = 10/20 = 0.50, b = 10/30 ≈ 0.33, c = 4/10 = 0.40, and d = 3/15 = 0.20, giving a-IV, b-III, c-I, d-II.
Choose your answer
Match the following:
| Price (P) and Marginal Cost (MC) | Lerner’s Index of monopoly power (approximately) |
| a) P= Rs 20 and MC= Rs 10 | I) 0.40 |
| b) P= Rs 30 and MC= Rs 20 | II) 0.20 |
| c) P= Rs 10 and MC= Rs 6 | III) 0.33 |
| d) P= Rs 15 and MC= Rs 12 | IV) 0.50 |
Answer and explanation
Correct answer B
Lerner's index is . The values are a = 10/20 = 0.50, b = 10/30 ≈ 0.33, c = 4/10 = 0.40, and d = 3/15 = 0.20, giving a-IV, b-III, c-I, d-II.
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Telangana SET (TG SET)