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Author Question: Suppose that a normal rate of return in the economy is 10% and the rate of return being earned by ... (Read 114 times)

naturalchemist

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Suppose that a normal rate of return in the economy is 10% and the rate of return being earned by firms in a competitive industry equals exactly 10%. Which of the following is a correct prediction based on this information?


◦ New firms will want to enter this industry, as the existing firms are earning an economic profit.
◦ Firms already in the industry will want to expand to try to increase their rate of return.
◦ Firms in the industry will not undertake any investment projects other than to replace depreciating capital stock.
◦ The industry size will contract.


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Marked as best answer by naturalchemist on Apr 19, 2019

yotaSR5

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naturalchemist

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Reply 2 on: Apr 19, 2019
Excellent


smrtceo

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Reply 3 on: Yesterday
Wow, this really help

 

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