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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 20: Oligopoly | Unit 5: Evaluation
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Page: 23 of 24
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Topic:
Government Intervention?
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- A couple of important questions regarding Government Intervention:
- Do the bads of oligopoly outweigh the goods?
- If so, can government make it better?
- A major obstacle to answering these questions is that the evidence is seldom clear-cut.
- While concentration creates the opportunity for greater inefficiency, it's no guarantee.
- Should government intervention be pursued, it generally comes in one of three ways:
- Antitrust Laws
- Price Regulation
- Public Ownership
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AGGREGATE EXPENDITURES EQUATION An equation that summarizes the four aggregate expenditures on gross domestic product by the four macroeconomic sectors. In the study of Keynesian economics, this equation is commonly used to summarize the demand side of the macroeconomy. The aggregate expenditures equation actually comes in three different versions depending on how many of the four sectors and their expenditures are included.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time at the confiscated property police auction hoping to buy either a computer that can play video games and burn DVDs or a black duffle bag with velcro closures. Be on the lookout for celebrities who speak directly to you through your television.
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This isn't me! What am I?
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The first paper currency used in North America was pasteboard playing cards "temporarily" authorized as money by the colonial governor of French Canada, awaiting "real money" from France.
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"The greatest things ever done on Earth have been done little by little. " -- William Jennings Bryan
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T-BILL
Treasury Bill
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