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Author Question: The Lerner Index is derived from the profit-maximizing condition of a firm. Indicate whether the ... (Read 20 times)

Chelseaamend

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on: Jul 1, 2018
The Lerner Index is derived from the profit-maximizing condition of a firm.
 
  Indicate whether the statement is true or false

Question 2

If a firm sets marginal revenue equal to marginal cost, it will make an economic profit.
 
  Indicate whether the statement is true or false


frogdreck123456

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

True . Start out with MR = MC, realize that MR = P(1 + 1/e), and solve.

Answer to Question 2

False. When a firm sets MR=MC it maximizes profits but the profit-maximizing level of output might still be negative (the smallest loss possible).


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