Answer in Microeconomics for rita #111929
April 21st, 2023
a)profit=$24
invested=$300
“text{percentage rate of return}=(24/300)*100” =8%
b)profit=$22
invested=$200
“text{percentage rate of return}=(22/200)*100%” =11%
c) rate= 10%
The other two firms will exit the market because the rate of returns would reduce.
If the number of firms reduce the effect would have positive effect to the 2 firms because there would be more market and vice versa.
If the firms copy each others technology the returns would be same ;
return=( 8%+11%)/2=9.5%