- CFA Exams
- CFA Level I Exam
- Study Session 10. Equity Valuation (2)
- Reading 26. Industry and Company Analysis
- Subject 2. Income statement modeling: operating costs and non-operating costs
CFA Practice Question
If an industry enjoys economies of scale, its ______ tend to be positively correlated with its sales levels.
II. gross margin.
III. operating margin.
I. average cost.
II. gross margin.
III. operating margin.
Correct Answer: II and III
Gross and operating margins that are positively correlated with sales provide evidence of economies of scale in an industry.
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