Homework Answers
A )
What is its percentage rate of return? = 15/150 = 10%
B )
Is the firm earning an economic profit ? = Yes
If so, how large
= 10% - 7% = 3%
C )
Will this Industry see entry or exit ?
= Entry, as there are economic profits in industry currently
D )
What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium ?
= 7%
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A firm in a purely competitive industry has a typical cost structure. The normal rate of...
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