The Lerner Index, which measures a monopolist’s pricing power, is defined as:
L = (P - MC) / P = 1 / |Ed|
Where:
For a monopolist to maximize profit, the absolute value of demand elasticity must be greater than one (|Ed| > 1), ensuring P > MC and a positive Lerner Index.
"Development of Railways during British rule encouraged colonial exploitation of the Indian resources."
Justify the given statement with valid arguments.
"Opening up of Suez Canal helped in establishing the British monopoly control over India's foreign trade".
Justify the given statement with valid arguments.