Question

a firm has $1,100,000 in sales, a lerner index of 0.62, and a marginal cost of $55, and competes against 1000 other firms in its relevant market. instruction: enter your responses rounded to two decimal places. a. what price does this firm charge its customers? $ b. by what factor does this firm mark up its price over marginal cost?

Answer 1

The firm charges its customers $34.10 and marks up its price over the marginal cost by a factor of 0.62.

Step-by-step explanation:

The firm's price can be calculated by multiplying the Lerner index with the marginal cost. In this case, the price is 0.62 * $55 = $34.1.

To find the markup factor, we can divide the price by the marginal cost. In this case, the markup factor is $34.1 / $55 = 0.62. This means that the firm marks up its price over the marginal cost by a factor of 0.62.