Given this information: There are 300 purely competitive farms in the local dair

Question

Given this information:

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 $24.00 for every $300.00 invested.

The rate of return for each of the 298 firms is 8%.

The other two dairies have a cost structure that generates profits of $22.00 for every $200.00 invested.

The rate of return for each of the 2 firms is 11%.

Assuming that the normal rate of profit in the economy is 10 percent, there will be exit.

The change in the number of firms will not affect the two that earn $22.00 for every $200.00 invested.

a)In long-run equilibrium, most firms (the ones that remain from the original 298) will earn the normal _____ (percent)

b) If firms can copy each other’s technology, what will be the rate of return eventually earned by all firms? _____ (percent)

Explanation / Answer

a) 10% b) 11% PLEASE RATE :) ask for help if req.

Related Questions

Navigate

• Browse (All)
• Browse G
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.