Competition in an Industry Tends to Drive Rates of Return

question 51

True/False

Competition in an industry tends to drive rates of return on invested capital up towards what is described as "perfectly competitive."

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Definitions:

Marginal Revenue Product

The additional revenue a firm generates from employing one more unit of input, such as labor or capital.

Productivity

An evaluation of how effectively a person, machine, factory, or system transforms inputs into valuable outputs.

Pure Rent

The return to any factor of production that is in fixed supply.

Fixed Supply

A condition where the quantity of a particular good, service, or resource does not change, regardless of the price.