Projecting sales price changes depends on factors specific to the firm and its industry that might affect demand and price elasticity.Which of the following types of companies would most likely be able to increase prices?
A) A firm in a capital intensive industry that is expected to operate near capacity for the near future.
B) A firm in a capital intensive industry in which excess capacity exists.
C) A firm operating in an industry that is expected to experience technological improvements in its production process.
D) A firm operating in an industry that is transitioning from the high growth to the maturity phase of its life cycle.

Question

Quizplus · Accepted Answer

A firm in a capital-intensive industry that is expected to operate near capacity for the near future would have an advantage in increasing prices as it is likely that demand will be higher than supply, giving the company greater pricing power.

Projecting Sales Price Changes Depends on Factors Specific to the Firm