If There Are Constant Returns to Scale in an Industry

question 13

True/False

If there are constant returns to scale in an industry, then in competitive equilibrium, profits in that industry must necessarily be zero.

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Definitions:

Projects

Planned sets of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Risk Premium

A risk premium is the additional return expected by an investor for taking on a higher level of risk, compared to a risk-free investment.

Expected Return

The average return anticipated on an investment based on its historical or probable future earnings.

Market Risk Premium

The additional return expected by investors for holding a risky market portfolio instead of risk-free assets.