A firm in a purely competitive industry has typical cost structure. the normal rate of profit in the economy is 5 percent. this firm is earning $5.50 on every $50 invested by its founders. what is the percentage rate of return?
Is the firm earning an economic profit? if so, how large?
Will this industry see entry or exit?
What will be the rate of return earned by the firms in this industry once the industry reaches long- run equilibrium?