Chapter 9: Long-run Costs And Output Decisions Flashcards
1
Q
What is Normal Rate of Return?
A
It is a rate that is sufficient for current investors interested in the industry.
2
Q
What is Above-Normal Rate of Return?
A
It has a positive profit level meaning the firm is making a profit.
3
Q
What is Below-Normal Rate of Return?
A
It means that the firm is suffering a loss.
4
Q
What is Exactly a Normal Rate of Return?
A
It means that the firm is making a profit that is just enough to cover all its costs, including the cost of capital or simply Breaking Even.
