If an Industry Earns a Return on Capital in Excess

question 40

Multiple Choice

If an industry earns a return on capital in excess of its cost of capital:

• A)It will soon attracts the attention of competition authorities
• B)Workers will push for higher pay and benefits causing the level of profitability to fall
• C)It will attract the attention of potential entrants and,unless protected by high barriers to entry,the return on capital will fall
• D)Firms within the industry will over-invest causing the return on capital to fall

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Definitions:

Biosphere

All regions of Earth where organisms live.

Population

A community of identical species inhabitants coexisting and mating in a particular region.

Decomposers

Organisms, primarily fungi and bacteria, that break down dead organic material, recycling nutrients back into the ecosystem.

Consumers

Organisms in an ecosystem that obtain energy by feeding on other organisms or organic matter, not capable of producing their own food.