# In a perfectly competitive market, the process of entry and exit will end when (i) accounting profits are zero. (ii) economic profits are zero. (iii) price equals minimum marginal cost. (iv) price equals minimum average total cost.

(ii) economic profits are zero

Explanation:

A perfect competition is characterised by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

I hope my answer helps you

## Related Questions

Gabriele enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of 1000, and selling for 962. At this price, this price, the bonds yield 6.6 percent.What must the coupon rate be on the bonds?

Explanation:

N(Number of periods) = 7 years

I/Y(Yield to maturity) = 6.6percent

PV(present value or market price) = \$962

PMT( coupon payment) = ?

FV( Future value or par value) = \$1,000.

We are using a Financial calculator for this.

N= 7; I/Y = 6.6; PV = -962; FV= \$1,000; CPT PMT= \$59.05

Therefore, the coupon rate of the bond is of the bond is \$59.05/1000

=5.91%

Consider the following information: Probability of State Rate of Return if State Occurs
Economy of Economy Stock A Stock B
Recession .20 .010 – .35
Normal .55 .090 .25
Boom .25 .240 .48
a. Calculate the expected return for the two stocks.'

11.15%

Explanation:

The formula to compute the expected rate of return is shown below:

Expected rate of return = (Recession probability× Possible Returns ) + (Normal Probability  × Possible Returns ) + (Boom Probability  × Possible Returns 3)

= (0.20 × 0.010) + (0.55 × 0.090) + (0.25 × 0.240)

= 0.002+ 0.0495 + 0.06

= 11.15%

Simply we multiply the probability with its return so that accurate rate could come.

Five welding jobs are waiting to be processed. Their processing times and due dates are given below. Using the critical ratio dispatching rule, in which order should the jobs be processedJob Processing Time (days) Job due date (days)
A 4 7
B 2 4
C 8 11
D 3 5
E 5 11

Order of processing the jobs:

Job   Critical Ratio

C          1.375

D          1.667

A          1.75

B          2.0

E          2.2

Explanation:

a) Data and Calculations:

Job      Processing      Job due       Critical

Time (days)     date (days)      Ratio

A                4                    7                1.75 (7/4)

B                2                    4                2.0 (4/2)

C               8                    11                1.375 (11/8)

D               3                    5                1.667 (5/3)

E               5                    11                2.2 (11/5)

b) The critical ratio (CR) dispatching indicates the priority sequencing that should be adopted to process work at a work center. The first process is to create the CR priority index number, which is obtained from the formula of due days divided by the processing days. Therefore, the job with the lowest CR is scheduled first.

To determine the order of processing using the critical ratio dispatching rule, the critical ratio for each job is calculated by dividing the time remaining until the job's due date by the processing time. The job with the highest critical ratio is processed first, followed by the job with the next highest critical ratio.

### Explanation:

The critical ratio dispatching rule is used to determine the order in which jobs should be processed based on their due dates and processing times. The critical ratio is calculated by dividing the time remaining until the job's due date by the processing time. The job with the highest critical ratio should be processed first, followed by the job with the next highest critical ratio, and so on.

1. Job C has a critical ratio of 1.125 (8/7).
2. Job E has a critical ratio of 1 (5/5).
3. Job D has a critical ratio of 0.6667 (2/3).
4. Job A has a critical ratio of 0.5714 (3/5).
5. Job B has a critical ratio of 0.5 (2/4).

Therefore, the jobs should be processed in the following order: C, E, D, A, B.

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Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market reevaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8 percent, with interest being paid semiannually. The required simple rate of return on this debt has now risen to 16 percent. What is the current value of this bond? (Round the answer to the nearest whole number.)​

Solving a question by financial calculator method. I am using (Texas Instruments BA II plus)

The answer is Current value = \$550

First, since it is Semiannual coupon, then we adjust the interest rate to semi-annual rate and also that multiply by 15 years by 2 since we have 2 semi annual periods per year.

### Current value

Also Note that: If using the same calculator as me, key in the numbers first before the function .

Then the Total duration of investment ;N is = 15 * 2 = 30

Then Interest rate; I/Y = 16% / 2 = 8%

After that the Face value; FV = 1000

Now the Semi annual Coupon Payment ; PMT = (8%/2)*1000 = 40

then CPT PV = \$549.689

Thus,  the current value of this bond is \$550 (rounded to whole number.)

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Current value = \$550

Explanation:

You can solve this question using a financial calculator. I am using (Texas Instruments BA II plus)

First, since it is Semiannual coupon, adjust the interest rate to semi-annual rate and multiply  15 years by 2 since we have 2 semi annual periods per year.

Note: If using the same calculator as me, key in the numbers first before the function .

Total duration of investment ;N = 15 * 2 = 30

Interest rate; I/Y = 16% / 2 = 8%

Face value; FV = 1000

Semi annual Coupon Payment ; PMT = (8%/2)*1000 = 40

then CPT PV = \$549.689

Therefore the current value of this bond is \$550 (rounded to whole number.)

Suppose that you are obtaining a personal loan from your uncle in the amount of \$30,000 (now) to be repaid in three years to cover some of your college expenses. If your uncle usually earns 9% interest (annually) on his money, which is invested in various sources, what minimum lump-sum payment three years from now would make your uncle satisfied with his investment?

\$38,851 approx

Explanation:

As per the information provided in the question, the minimum annual rate of return would be at-least equal to the usual rate of return the investor (here uncle) earns. Here it is 9% per annum.

Anything earned below this rate of return will not satisfy the investor since this represents the minimum required rate of return.

A=

Where A= Amount

P= Principal

r= Annual Rate Of Interest

n= period of loan

Therefore, A=

A= \$38,850.87 or \$38,851 approx.

Although ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives, a. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.
b. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.
c. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly.
d. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.
e. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail.