If the Contribution Per Unit Is £15 and the Breakeven

question 3

Multiple Choice

If the contribution per unit is £15 and the breakeven point is 60,000 units. Which of the following statements could NOT be true?

• A) The selling price per unit is £55 and the variable cost per unit is £40.
• B) The fixed costs are £900,000.
• C) To make a profit of £300,000, then 80,000 units would have to be sold.
• D) To make a profit of £500,000, then 100,000 units would have to be sold.

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Definitions:

Demand Function

A mathematical function that describes the quantity of a good that consumers are willing and able to purchase at various prices.

Subsidy

A financial contribution granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.

Monopoly

A market structure characterized by a single seller who has exclusive control over the supply of a good or service and where entry by new competitors is obstructed.

Utility

A measure of satisfaction or happiness that a consumer derives from the consumption of goods and services.