A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 8.00 percent. This firm is earning $15.00 on every $150.00 invested by its founders.
a. What is its percentage rate of return?
b. How large of the profit is the firm earning? (percentage)
c. What will be the rate of return earned by firms in this industry once the industry reaches long-run equilibrium? (percentage)