Is the firm earning an economic profit

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Reference no: EM131101549

A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 5 percent. This firm is earning $15 on every $150 invested by its founders.

a. What is its percentage rate of return? percent.

b. Is the firm earning an economic profit? (Click to select) Yes No.

If so, how large? percent.

c. Will this industry see entry or exit? (Click to select)ExitEntry.

d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium? percent.

Reference no: EM131101549

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