An Unregulated Industry Has a Lerner Index of Zero

question 85

Multiple Choice

An unregulated industry has a Lerner index of zero.These numbers:

• A) reveal that social welfare would be improved by regulating the firms.
• B) are consistent with the industry being monopolistically competitive.
• C) are consistent with the industry being perfectly competitive.
• D) reveal that social welfare would be improved by regulating the firms and are consistent with the industry being monopolistically competitive.

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Definitions:

Shareholders

Individuals or entities that legally own one or more shares of stock in a joint-stock company or corporation.

Company

A legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value.

Stock

Shares in the ownership of a company, representing a claim on part of the corporation's assets and earnings.