Suppose That the Normal Rate of Return in the Inkjet

question 31

Multiple Choice

Suppose that the normal rate of return in the inkjet printer industry is 10% and the return being earned by firms in this industry equals exactly 5%. Which of the following is likely to follow from this scenario?

• A) Firms will collude to keep competition out.
• B) New firms will want to enter the industry.
• C) Firms will want to leave the industry.
• D) The normal rate of return will fall to 5% in the long run.

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