Question

True or False: Firms operating in more price-competitive industries, or exhibiting lower levels of market power, generally exhibit lower levels of business risk, all other things being equal. This statement is: True False

Answer 1

Answer:

The statement is false

Explanation:

Determining the profitability depends on market power. At a higher market power, the level of profitability will be high.

Conversely, a company operating in a system where its market power is low which results into inability to compete with other companies will cause a low probability.