What Assumption Does Break-Even Analysis Make That Limits Its Overall

question 153

Multiple Choice

What assumption does break-even analysis make that limits its overall usefulness?

• A) It focuses on how to achieve a price objective.
• B) It assumes a company wants to gain a certain market share.
• C) It relies on demand for a product being inelastic.
• D) It focuses only on competitive factors and not costs.
• E) It assumes that demand is elastic for the product.

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Definitions:

Avoid Losses

A principle in behavioral finance and economics indicating people's tendency to prefer avoiding losses to acquiring equivalent gains, known as loss aversion.

Kahneman And Tversky

Psychologists noted for their work on the psychology of judgment and decision-making, as well as behavioral economics.

Risks

Potential events or actions that may cause loss or hinder achievement of objectives.

Probability Of Success

The likelihood of achieving a goal or completing a task successfully, often expressed as a percentage.