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5. Consider two markets with the following characteristics: Market A has 3 equally-sized firms with the same marginal cost. Market B has 6 firms: a

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5. Consider two markets with the following characteristics: Market A has 3 equally-sized firms with the same marginal cost. Market B has 6 firms: a low cost firm with 50% market share and the remaining 5 firms all with the same marginal cost. Both markets have the same aggregate demand elasticity. In which of these markets will the Lerner index (average price cost margin) be higher? Explain

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