Economic Profits in the Rent-A-Wreck Industry Are $400,000 Per Firm

question 69

Multiple Choice

Economic profits in the rent-a-wreck industry are $400,000 per firm.Assuming that the industry is perfectly competitive,

• A)new firms will enter and the supply of the car rentals will increase.
• B)new firms will enter but there will be no effect on the supply of car rentals.
• C)firms will leave the industry and supply will fall.
• D)the industry is in equilibrium.

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Definitions:

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the return from an investment divided by the cost of the investment.

Negotiated Price

The final price at which a transaction is made between buyer and seller after discussion and agreement.

Investment Center Performance

Involves the evaluation of a business unit's effectiveness in generating profits and efficiently managing its capital investments.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.