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Author Question: For a monopoly market, if the Lerner Index is 2, then A) the monopoly is maximizing its profit. ... (Read 33 times)

laurencescou

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on: Jul 1, 2018
For a monopoly market, if the Lerner Index is 2, then
 
  A) the monopoly is maximizing its profit.
  B) the price elasticity of demand is -2.
  C) the price elasticity of demand is -0.5.
  D) None of the above.

Question 2

The three models of oligopolies, Cournot, Stackelberg and Bertrand, all assume firms independently choose the quantity of output to produce.
 
  Indicate whether the statement is true or false


hugthug12

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

False. While the Cournot and Stackelberg models assume quantity choice as the action, in the Bertrand model, firms choose price.


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