True or false: Large markups always mean large profits.

Answer 1

False. While large markups can lead to larger profits per unit sold, they do not always guarantee large profits overall. This is because profit also depends on factors such as sales volume, market demand, competition, and fixed costs. If a product with a large markup does not sell well, the total profits may still be low, or even negative. Conversely, products with smaller markups can generate significant profits if they sell in high volume. Thus, profit is determined by both markup and sales performance.