In Long-Run Competitive Equilibrium It Is Possible for Firm Owners

question 16

Multiple Choice

In long-run competitive equilibrium it is possible for firm owners to

• A)earn both rent and economic profit.
• B)earn rent but not economic profit.
• C)earn both economic profit and rent.
• D)both b and c
• E)both a and c

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Definitions:

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.

Beta Risk

Beta risk measures the volatility of an investment in relation to the market as a whole, indicating how much an asset's price is expected to fluctuate relative to overall market movements.