A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 6 percent. This firm is earning $5.50 on every $50 invested by its founders.
Instructions: Enter your answers as whole numbers.
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) Exit Entry.
d. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium? percent.