A firm has a marginal cost of $20 and charges a price of $40. the lerner index for this firm is 0.50.
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What is Lerner index?</h3>
Lerner index, in economics is a measure of the market power of a firm. Formalized by the Russian-British economist Abba P. Lerner in 1934.
The Lerner index is expressed in the following formula:
Lerner index = P - MC/P
where P represents the price of the good set by the firm and MC represents the firm's marginal cost.
The index measures the percentage markup that a firm is able to charge over its marginal cost.
The index ranges from a low value of 0 to a high of 1.
The higher the value of the Lerner index, the more the firm is able to charge over its marginal cost, hence the greater its monopoly power.
To learn more about Lerner Index, refer
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The existence of trade for country that has developed an expertise or reputation for quantity in the production of a particular good is best explained by <u>"acquired comparative advantage".</u>
A few business analysts make a distinction among natural and acquired comparative advantages. A natural comparative advantage exists inside a nation that has regular assets that are required to create an item, while a procured near favorable position is the favorable position picked up by an individual or a nation by investing a great deal of energy or assets delivering an item. For example, Saudi Arabia has a a natural comparative advantage with its tremendous stores of oil. (Saudi Arabia additionally has an outright favorable position in oil, since the expense of its extraction is not exactly somewhere else.) Since Saudi Arabia has couple of different assets, without exchange, it would be amazingly poor; in view of exchange, it is to a great degree affluent. Japan, then again, has couple of normal assets, yet it has an acquired comparative advantage in its assembling and business know-how, which it has created throughout the years.
Answer:
Explanation:
From the given information;
Suppose the interest rate is constant. then at 10% three-year loan;
The total interest at 10% will be:
= $300000 × 10% × 3years
= $90000
Aso, 8% one year loan with rollover will be total interest at 8%:
= $300000 × 8% × 3 years
= $72000
Savings in interest of Sauer Food Company = $(90000 - 72000)
= $18000
Suppose short-term rates change, then for the first year, we will have:
= 300000 × 0.1
= $30000
second year will be = 300000 × 0.13
=$39000
third year will be= 300000 × 0.18
=$54000
As such, the total rate of the variable loan = $30000 + $39000 + $54000
= $123000
However, the fixed rate at 10% three year loan is equal to = $90000
As such, the additional total interest cost = $(123000 - 90000)
= $33000
11th grade because that's the grade above
