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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 2: Structure Page: 7 of 24

Topic: Concentration Ratios <=PAGE BACK | PAGE NEXT=>

  • The most popular measure (or measures) of concentration has (have) been the concentration ratio.

  • A quick definition:

  • A concentration ratio is the proportion of total output in an industry that's produced by a given number of the largest firms in the industry.
  • The two most common concentration ratios are the 4-firm concentration ratio and 8-firm concentration ratio.

  • In general concentration ratios range for a low of 0% to a high of 100%.

  • A ratio of 0% indicates perfect competition and 100% ratio indicates total market control by the given number of firms use for the calculation


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INTERCEPT, CONSUMPTION LINE

The intercept of the consumption line indicates autonomous consumption, consumption that does not depend on the level of income or production. This can be thought of as the baseline level of consumption that would be undertaken if income falls to zero. Autonomous consumption is affected by the consumption expenditures determinants, which cause a change in the intercept and a shift of the consumption line. The value of the intercept of the saving line is the negative of the value of the intercept of the saving line.

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Today, you are likely to spend a great deal of time touring the new suburban shopping complex wanting to buy either a genuine fake plastic Tiffany lamp or a microwave over that won't burn your popcorn. Be on the lookout for vindictive digital clocks with revenge on their minds.
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
"always remember an epitaph which is in the cemetery at Tombstone, Arizona. It says: „Here lies Jack Williams. He done his damnedest.¾ I think that is the greatest epitaph a man can have ‚ When he gives everything that is in him to do the job he has before him. That is all you can ask of him and that is what I have tried to do. "

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