The Lerner index measures:

A) a firm's potential monopoly power.
B) the amount of monopoly power a firm chooses to exercises when maximizing profits.
C) a firm's potential profitability.
D) an industry's potential market power.

Lerner Index

An economic measure of a firm's market power, calculated as the difference between price and marginal cost relative to price, indicating the degree of monopoly power.

Monopoly Power

The degree of power held by a monopoly, characterized by the ability to control market prices and exclude competitors within a particular market or industry.