EBK MANAGERIAL ECONOMICS
4th Edition
ISBN: 9780100546622
Author: FROEB
Publisher: YUZU
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Question
Chapter 5, Problem 1MC
To determine
The increasing factor of the break-even quantity.
Expert Solution & Answer
Explanation of Solution
Option (c)
The break-even point refers to a point in the level of operations at which a company experiences that its revenue generated is equal to its cost incurred. The break-even point can be calculated using the following formula:
As per Equation (1), a decrease in the price level will decrease the denominator and thereby increase the break-even quantity. Therefore, a fall in the price level will increase the break-even quantity and thus, option (c) is correct.
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Chapter 5 Solutions
EBK MANAGERIAL ECONOMICS
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