Final answer:
Improved quality allows businesses to set flexible pricing, which can justify higher price points and increase profitability, reinforcing the truth of the statement.
Step-by-step explanation:
The statement 'Improved quality can increase profitability via allowing flexible pricing' is True. Higher quality products can justify higher price points, attracting consumers who are willing to pay more for better quality. In turn, this can lead to increased profitability for businesses. On the competitive front, firms that offer superior or less expensive products may see an increase in profits due to consumer preference for higher value offerings. Meanwhile, employees at these companies may benefit from higher incomes as the company's financial health improves. Balancing quality and cost is crucial as, ultimately, consumers who perceive greater value in a product will contribute to the company's profitability and marketplace success.