Which company would you expect to have a higher profit margin, a pharmaceutical company that develops new medical drugs, or a grocery store? Why?
- Pharmaceutical company! pharmaceutical company adds alot of value to its products, so it can charge higher prices and earn a higher profit margin.
- The grocery store does not add a lot of value to its products. It simply brings goods together under one roof. the grocery store canot boose profit margin by raising prices because customers would shop at another store to pay lower prices for the same products. The pharmaceutical company can change high prices bcause customers cannot get a similar product anywhere.