n​ 2009, the price of​ Amazon's Kindle 2 was 

​$359359​, 

and their estimated marginal cost was 

​$159159. 

 What was​ Amazon's Lerner​ Index?  

The value of​ Amazon's Lerner Index​ (L) was 

enter your response here. 

The **Lerner Index (L)** measures a firm's pricing power, and is calculated using the formula:

\[
L = \frac{P - MC}{P}
\]

Where:
- $ P $ is the price of the product.
- $ MC $ is the marginal cost of producing the product.

In this case:
- $ P = 359 $ (the price of the Kindle 2)
- $ MC = 159 $ (the estimated marginal cost)

Substituting the values into the formula:

\[
L = \frac{359 - 159}{359} = \frac{200}{359} \approx 0.557
\]

So, **Amazon's Lerner Index** is approximately **0.557** (or 55.7%).

Would you like more details or have any other questions?

Here are 5 related questions:
1. What does the Lerner Index signify in economic terms?
2. How does a higher Lerner Index affect consumer welfare?
3. Can you have a negative Lerner Index? Why or why not?
4. How do firms in a perfectly competitive market compare in terms of the Lerner Index?
5. How can companies reduce their marginal cost to lower the Lerner Index?

**Tip:** A higher Lerner Index indicates more pricing power, meaning the firm has more ability to mark up prices over costs.

In 2009, the price of Amazon's Kindle 2 was $359, and their estimated marginal cost was $159. What was Amazon's Lerner Index?

This article explains how to calculate Amazon's Lerner Index based on the Kindle 2 pricing in 2009. The price was $359 and the estimated marginal cost was $159. Using the Lerner Index formula, we determine Amazon's market power in terms of price markup, ideal for students of high school economics or college-level microeconomics.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation