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3 If an industry earns a return on capital in excess of its cost of capital: O a. Incumbents will earn abnormal profit, and build
3 If an industry earns a return on capital in excess of its cost of capital: O a. Incumbents will earn abnormal profit, and build entry barriers O b. The government will intervene to make sure that competition will increase O c. It is likely to attract the attention of firms looking to enter the industry, which may eventually lead to the return on capital falling O d. It will attract firms outside the industry, but the incumbents will have erected entry barriers
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