e. What will be the rate of return earned by most firms in the industry in long-run equilibrium? percent f. If firms can copy each other's technology, what will be the rate of return eventually earned by all firms? percent

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Please help with e and f. Thanks :)

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 $24 for every $300 invested.
Instructions: Enter your answers as a whole number.
a. What is the percentage rate of return for these 298 dairies?
8 percent
b. The other two dairies have a cost structure that generates profits of $22 for every $200 invested. What is their percentage rate of
return?
11 percent
C. Assuming that the normal rate of profit in the economy is 9 percent, and that firms cannot copy each other's technology, will there
be entry or exit?
Exit
d. Will the change in the number of firms affect the two that earn $22 for every $200 invested?
Yes, because those two firms can claim a larger market share.
No, because the exiting firms didn't belong in the industry.
Yes, because those exiting firms will spread their technology.
O No, because those two firms are too small.
Transcribed Image Text: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 $24 for every $300 invested. Instructions: Enter your answers as a whole number. a. What is the percentage rate of return for these 298 dairies? 8 percent b. The other two dairies have a cost structure that generates profits of $22 for every $200 invested. What is their percentage rate of return? 11 percent C. Assuming that the normal rate of profit in the economy is 9 percent, and that firms cannot copy each other's technology, will there be entry or exit? Exit d. Will the change in the number of firms affect the two that earn $22 for every $200 invested? Yes, because those two firms can claim a larger market share. No, because the exiting firms didn't belong in the industry. Yes, because those exiting firms will spread their technology. O No, because those two firms are too small.
e. What will be the rate of return earned by most firms in the industry in long-run equilibrium?
percent
f. If firms can copy each other's technology, what will be the rate of return eventually earned by all firms?
percent
Transcribed Image Text:e. What will be the rate of return earned by most firms in the industry in long-run equilibrium? percent f. If firms can copy each other's technology, what will be the rate of return eventually earned by all firms? percent
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