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LERNER INDEX: The difference between price (p) and marginal cost (mc) as a fraction of price, that is [p-mc]/p. The Lerner index is usually taken as an indicator of market power because the larger the index, the larger the difference between price and marginal cost, that is, the larger the distance between the price and the competitive price. The Lerner index depends on the elasticity of demand. The Lerner index is also called the price-cost margin.
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Lesson 16: Perfect Competition | Unit 5: Evaluation
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Page: 28 of 28
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In this unit, you should have learned about:- The good of perfect competition, including that it efficiently allocations resources by equating price and marginal cost, produces at the lowest possible cost by equating price and average cost, and ensures not be a normal profit.
- The bad of perfect competition, including that it provides no incentives for innovation and growth, is exceedingly due because every good is the same, and can be misused by policy markers if they fail to recognized that it is an idealized model.
- Why perfect competition, with no market control, is a benchmark for evaluating the efficiency of firms (monopoly, monopolistic competition, and oligopoly) that do have market control.
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INTERCEPT, AGGREGATE EXPENDITURES LINE The intercept of the aggregate expenditures line indicates autonomous expenditures, aggregate expenditures that do not depend on the level of income or production. This can be thought of as aggregate expenditures that the four macroeconomic sectors (household, business, government, and foreign) undertake regardless of the state of the economy. Autonomous expenditures are affected by the aggregate expenditures determinants, which cause a change in the intercept and a shift of the aggregate expenditures line.
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BLACK DISMALAPOD
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites hoping to buy either a country wreathe or galvanized steel storage shelves. Be on the lookout for a thesaurus filled with typos.
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There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
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"Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations. " -- Steve Jobs, Apple Computer founder
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ABA
American Bankers Association, Associate in Business Administration
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