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Homework answers / question archive / ABC Firm in Industry Alpha has MC of production = $100 and they know from past experience that their Lerner index is 0

ABC Firm in Industry Alpha has MC of production = $100 and they know from past experience that their Lerner index is 0

Marketing

ABC Firm in Industry Alpha has MC of production = $100 and they know from past experience that their Lerner index is 0.3. XYZ firm in Industry Beta has MC of production = $35 and Lerner index is 0.55.

a. Determine optimal price both firms should be charging.

b. Which firm is likely to earn more profits in the long run? Explain why the connection between Lerner index and industry concentration made you reach this conclusion.

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