Question #21
Reading: Reading 14 Financial Statement Modeling
PDF File: Reading 14 Financial Statement Modeling.pdf
Page: 12
Status: Unattempted
Correct Answer: A
Question
Which of the following statements regarding pricing power is most accurate? A company is most likely to have a high level of pricing power, if it is operating in an industry that:
Answer Choices:
A. has high fixed costs
B. has low barriers to exit
C. is fragmented
Explanation
Pricing power is most likely to be low in industries that are fragmented, have limited
growth potential, have high barriers to exit, have high fixed costs, and in industries where
the product offerings are essentially identical.