A firm in a purely competitive industry has a typical cost structure. The normal rate of...

Question

Question

A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent.

business economics

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

a) Rate of return = 15/150 = 0.1 = 10%

b) Yes

Rate of profit = 10-7 = 3%

c) This industry will see entry as the industry is earning positive economic profits

d) Rate of return = normal profits = 7%

Add a comment

Answer 2

Similar Homework Help Questions

A firm in a purely competitive industry has a typical cost structure. The normal rate of...

A firm in a purely competitive industry has a typical cost structure. The normal rate of profit in the economy is 7 percent. This firm is earning $15 on every $150 Invested by its founders Instructions: Enter your answers as whole numbers a What is its percentage rate of return? 10 percent b. Is the firm earning an economic profit? Yes If so, how large? percent c. Will this industry see entry or exit? (Click to select) d. What will...
Help Save & Exit Submit Saved ment Check my work A firm in a purely competitive...

Help Save & Exit Submit Saved ment Check my work 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 $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? (Clck to select If so, how large? percent c. Will this...
There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms,...

There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms, 298 have a cost structure that generates profits of $36 for every $600 invested. Instructions: Enter your answers as whole numbers. a. What is the percentage rate of return for these 298 dairies? percent b. The other two dairies have a cost structure that generates profits of $52 for every $400 invested. What is their percentage rate of return? percent c. Assuming that the...

1) Compared with a purely competitive industry, a monopolist produces a. more output at a lower...

1) Compared with a purely competitive industry, a monopolist produces a. more output at a lower price. b. less output at a higher price. c. more output at a higher price. d. less output at a lower price. 2) Which one of the following statements about monopoly firms and firms in a purely competitive industry is true? a. In the long run, monopoly firms and firms in a purely competitive industry operate at the minimum point of their average total...
1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC...

1 Price The figure below captures a firm in a perfectly competitive industry. MC ATC AVC ا أ ا 1 2 3 4 5 6 7 8 Quantity Suppose the current price is $6. What will happen in the long run? O Nothing will happen in the long run. The firm is earning zero economic profit. O Since the firm is earning a positive economic profit, there is an incentive for new firms to enter the industry in the long...
A firm in a purely competitive industry is currently producing 1,200 units per day at a...

A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $450. If the firm produced 1,000 units per day, its total cost would be $300, and if it produced 700 units per day, its total cost would be $275. Instructions: Round your answers to 2 decimal places. a. What are the firm's ATC at these three levels of production? At 1,200 units per day, ATC = $ 0.33 At 1,000 units...

A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $450. If the...

A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $450. If the firm produced 1,000 units per day, its total cost would be $300, and if it produced 700 units per day, its total cost would be $275. Instructions: In parts a and c, round your answers to 2 decimal places In part d, round your answer to 1 decimal place. a. What are the firm's ATC at these three...
Assume that the cost data in the following table are for a purely competitive producer:

Assume that the cost data in the following table are for a purely competitive producer: TotalProductAverageFixed CostAverageVariable CostAverageTotal CostMarginal Cost01$60.00$45.00$105.00$45.00230.00 42.50 72.5040.00320.00 40.00 60.0035.00415.00 37.50 52.5030.00512.00 37.00 49.0035.00610.00 37.50 47.5040.0078.57 38.57 47.1445.008 7.50 40.63 48.1355.009 6.67 43.33 50.0065.0010 6.00 46.50 52.5075.00 Instructions: If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce. a. At a product price of $66.00 (i) Will this firm produce in the short run? (Click to select) No Yes (ii) If it is preferable to produce, what...
Question 7 5 pts If the typical form in a perfectly competitive market is currently earning...

Question 7 5 pts If the typical form in a perfectly competitive market is currently earning a 5% economic pront, what will happen in this market in the long run? O new firms will enter until the economic profits have disappeared. firms will exit until the economic profit reaches 10% firms will neither enter norexit, since 5% economic profit is enough to maintain the existing number of firms in the market. It depends on the rate of normal profit in...

In the long run in a purely competitive industry, (select only one correct answer). entry and...

In the long run in a purely competitive industry, (select only one correct answer). entry and exit of firms can occur. firms do not have sufficient time to liquidate their assets. plant size is fixed. the industry is composed of a specific number of firms.

A firm in a purely competitive industry has a typical cost structure. The normal rate of...

Homework Answers