Question

Firms with high churn rates are likely to be more profitable.

What can be said about firms with high churn rates?
a. They are more profitable.
b. They are less profitable.
c. Churn rates have no impact on profitability.
d. Profitability depends on other factors.

Answer 1

Firms with high churn rates are not necessarily more profitable. Churn rate, which is the percentage of customers or subscribers who stop using a company's product or service, does not guarantee higher profitability.

Step-by-step explanation:

Firms with high churn rates are not necessarily more profitable. Churn rate refers to the percentage of customers or subscribers who stop using a company's product or service within a given time period. While high churn rates can indicate issues with customer satisfaction or product quality, it doesn't guarantee higher profitability. Factors such as customer acquisition costs, retention strategies, and overall market conditions also play a significant role in determining profitability.