Which One of the Following Statements About Break-Even Analysis for Evaluating

question 72

Multiple Choice

Which one of the following statements about break-even analysis for evaluating products or services is True?

• A) The break-even quantity will tend to increase as the variable cost per unit of production decreases.
• B) As sales increase beyond the break-even quantity, total before-tax profits tend to decrease.
• C) A restaurant's opening of downsized facilities with only drive-through service is an example of lowering fixed costs and the break-even quantity.
• D) Increasing the unit selling price has the effect of increasing the break-even quantity.

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Definitions:

Insulin

A hormone produced by the pancreas that regulates blood glucose levels by facilitating the uptake of glucose into tissues, used medically to treat diabetes.

Quantity Demanded

The total amount of a good or service that consumers are willing to buy at a given price level in a given period.

Perfectly Inelastic

Describing a situation where the quantity demanded or supplied of a good does not change in response to a price change.

Demand Curve

A graphical representation of the quantity of a good that consumers are willing and able to purchase at various prices during a given period.