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Calculating degree of monopoly power using Lerner index.

A monopolist faces the demand curve p = 11-Q , where Q is measured in thousands of units. The monopolist has a constant average cost of $6 per unit.

a) find out the firm's degree of monopoly power using the Lerner index?

b) A government regulatory agency sets price ceiling of $7 per unit. Find out quantity produced? Profit? What happen to the degree of monopoly power?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M917862

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