Table: Constant Cost Industries \(\begin{array}{lrrrrrrrr}
\hline \text { Aerospace/Defense- } & & & & & & & & \
\text { Major Diversified } & -0.43 & 8307.3 \mathrm{~B} & 10.30 & 18.80 & 3.43 & 62.27 & -6.30 & 7.00\
\text { Industrial Electrical }\
\text { Equipment } & 1.79 & 148.3 \mathrm{~B} & 22.50 & 13.20 & 1.49 & 37.38 & 7.54 & 6.90 \
\text { REIT-Office } & 0.68 & 49.9 \mathrm{~B} & 106.50 & 2.50 & 3.75 & 118.29 & 1.94 & 6.70 \
\text { Electric Utilities } & 0.78 & 9229.9 \mathrm{~B} & 18.40 & 6.10 & 3.69 & 148.53 & 1.18 & 6.70\
\text { Aerospace/Defense }\
\text { Products \& Services } & 1.01 & 242.3 \mathrm{~B} & 15.10 & 23.60 & 2.04 & 127.30 & -36.94 & 6.60 \
\text { Publishing- } & & & & & & & & \
\text { Newspapers } & -0.42 & 2663.0 \mathrm{~B} & 9.50 & 17.70 & 0.70 & 100.59 & -2.30 & 6.50\
\text { Packaging \& } & & & & & & & & \
\text { Containers } & -0.36 & 708.7 \mathrm{~B} & 16.60 & 21.10 & 1.63 & 105.25 & 20.40 & 6.50 \
\text { Office Supplies } & 1.38 & 1.0 \mathrm{~B} & 7.00 & 4.50 & 2.19 & 26.96 & 3.27 & 6.50 \
\text { Major Integrated } & & & & & & & & \
\text { Oil \& Gas } & 1.06 & 41049.6 \mathrm{~B} & 12.30 & 15.00 & 3.30 & 38.41 & 1.99 & 6.50\
\text { Farm \& Construction }\
\text { Machinery } & 1.52 & 5229.1 \mathrm{~B} & 21.10 & 19.40 & 1.37 & 225.22 & 6.17 & 6.50 \
\text { Sporting Activities } & 2.05 & 4.1 \mathrm{~B} & 23.20 & 5.50 & 1.30 & 52.96 & 1.85 & 6.40 \
\text { Home Health Care } & 1.00 & 6.8 \mathrm{~B} & 14.80 & 13.30 & 1.79 & 51.11 & -8.16 & 6.30\
\text {Movie Production, }\
\text { Theaters}&1.88 & 8.9 \mathrm{~B} & 19.10 & 20.70 & 5.33 & 192.97 & 36.91 & 6.20 \
\text {Chemicals- }\
\text {Major Diversified }&1.95 & 12157.8 \mathrm{~B} & 21.70 & 16.30 & 1.91 & 69.91 & 7.87 & 6.20 \
\end{array}\) As of July 2011, oil companies had a 6.5 percent profit margin (for each dollar of sales, 6.5 cents was profit), ranking 131 (profit margin is the far right column). Other industries making the same profit margin include packaging and containers, office supplies, farm and construction, and newspapers. If these profits are typical, what does this similar profit margin across very different industries suggest about oil companies' profits?
A) They are making zero profits.
B) They are making above-average profits and should expect entry.
C) They are making above-average profits and should expect no entry or exit.
D) Nothing because it is the total profits that matter, not profits per dollar of sales.

Question

Quizplus · Accepted Answer

The Answer of Table: Constant Cost Industries \(\begin{array}{lrrrrrrrr}
\hline \text { Aerospace/Defense- } & & & & & & & & \
\text { Major Diversified } & -0.43 & 8307.3 \mathrm{~B} & 10.30 & 18.80 & 3.43 & 62.27 & -6.30 & 7.00\
\text { Industrial Electrical }\
\text { Equipment } & 1.79 & 148.3 \mathrm{~B} & 22.50 & 13.20 & 1.49 & 37.38 & 7.54 & 6.90 \
\text { REIT-Office } & 0.68 & 49.9 \mathrm{~B} & 106.50 & 2.50 & 3.75 & 118.29 & 1.94 & 6.70 \
\text { Electric Utilities } & 0.78 & 9229.9 \mathrm{~B} & 18.40 & 6.10 & 3.69 & 148.53 & 1.18 & 6.70\
\text { Aerospace/Defense }\
\text { Products \& Services } & 1.01 & 242.3 \mathrm{~B} & 15.10 & 23.60 & 2.04 & 127.30 & -36.94 & 6.60 \
\text { Publishing- } & & & & & & & & \
\text { Newspapers } & -0.42 & 2663.0 \mathrm{~B} & 9.50 & 17.70 & 0.70 & 100.59 & -2.30 & 6.50\
\text { Packaging \& } & & & & & & & & \
\text { Containers } & -0.36 & 708.7 \mathrm{~B} & 16.60 & 21.10 & 1.63 & 105.25 & 20.40 & 6.50 \
\text { Office Supplies } & 1.38 & 1.0 \mathrm{~B} & 7.00 & 4.50 & 2.19 & 26.96 & 3.27 & 6.50 \
\text { Major Integrated } & & & & & & & & \
\text { Oil \& Gas } & 1.06 & 41049.6 \mathrm{~B} & 12.30 & 15.00 & 3.30 & 38.41 & 1.99 & 6.50\
\text { Farm \& Construction }\
\text { Machinery } & 1.52 & 5229.1 \mathrm{~B} & 21.10 & 19.40 & 1.37 & 225.22 & 6.17 & 6.50 \
\text { Sporting Activities } & 2.05 & 4.1 \mathrm{~B} & 23.20 & 5.50 & 1.30 & 52.96 & 1.85 & 6.40 \
\text { Home Health Care } & 1.00 & 6.8 \mathrm{~B} & 14.80 & 13.30 & 1.79 & 51.11 & -8.16 & 6.30\
\text {Movie Production, }\
\text { Theaters}&1.88 & 8.9 \mathrm{~B} & 19.10 & 20.70 & 5.33 & 192.97 & 36.91 & 6.20 \
\text {Chemicals- }\
\text {Major Diversified }&1.95 & 12157.8 \mathrm{~B} & 21.70 & 16.30 & 1.91 & 69.91 & 7.87 & 6.20 \
\end{array}\) As of July 2011, oil companies had a 6.5 percent profit margin (for each dollar of sales, 6.5 cents was profit), ranking 131 (profit margin is the far right column). Other industries making the same profit margin include packaging and containers, office supplies, farm and construction, and newspapers. If these profits are typical, what does this similar profit margin across very different industries suggest about oil companies' profits?
A) They are making zero profits.
B) They are making above-average profits and should expect entry.
C) They are making above-average profits and should expect no entry or exit.
D) Nothing because it is the total profits that matter, not profits per dollar of sales.

Table: Constant Cost Industries As of July 2011, Oil Companies Had a 6