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What is considered to be the normal rate of return

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Reference no: EM131311850

Short Answer & Essay Questions

You must complete two Short answer questions and one Essay question All answers must be in the form of a paragraph (minimum of 5 sentences per paragraph). Please select from below:

Short Answer

1. Think about a firm and its investments. What is considered to be the normal rate of return? What type of specific cost would this be to a firm?

2. Think about how demand and supply may change over time given certain events. What is the relationship between average total cost and marginal costs?

3. What are two reasons for a firm to operate at a loss? Please provide an example.

Essay

1. Describe the Behavior of the Profit-Maximizing Firm. How does the firm account for costs? Define and explain the two types of costs associated with production? How do decisions change from the short-run to the long-run?

2. Describe how economies and diseconomies of scale affect firms. How do barriers to entry lead to economies of scale? What are the three types of returns to scale and how do they impact the way the firm produces? What are the competitors that face the various returns to scale?

Reference no: EM131311850

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