Question

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

Answer 1

The normal rate of profit in the economy is 5 percent. This firm is earning $5.50 on every $50 invested by its founders. Since the firm is earning $5.50 on every $50 invested, the percentage rate of return is computed by ($5.50 / $50) x 100) which will result to 11%