If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.

Question

Quizplus · Accepted Answer

The actual costs will increase because of the additional sales and the other product lines (which are subsidizing the undercosting of the growing product line) will suffer. The net result will be the company having a lower operating income than it could have had.

If Companies Increase Market Share in a Given Product Line