The introduction of satellite television systems would cause the ...

[wenmo]

The introduction of satellite television systems would cause the Lerner Index for cable television to
 
  A) become smaller.
  B) increase.
  C) change in accordance to the increase in market power of cable TV providers.
  D) be unchanged.

Question 2

Explain why individual firms in competitive markets face more elastic demand curves than the market as a whole.
 
  What will be an ideal response?

[Tabitha_2016]

Answer to Question 1

A

Answer to Question 2

In a competitive market, if an individual firm increases its price it will lose all of its customers, as consumers simply buy from another firm. However, if the price of the good increases for all firms some consumers will not continue to buy the good, but for many prices some consumers will continue to purchase the good.