There is an inverse relationship between the price-cost margin and the level of competition in a particular industry.

Question

Quizplus · Accepted Answer

This statement is true. In general, when competition is high in an industry, firms have less market power and are unable to charge higher prices. As a result, profit margins are lower (i.e., the price-cost margin is lower). Conversely, when competition is low, firms may have more market power and be able to charge higher prices, resulting in higher profit margins.

There Is an Inverse Relationship Between the Price-Cost Margin and the Level