Company X and Company Y Each Have a Break-Even Point

question 5

Multiple Choice

Company X and Company Y each have a break-even point of 2,000 units. If Company X has higher fixed costs but lower variable costs, what will be the effect of an increase in sales volume, for both companies, to 2,200 units?

• A) The two companies will be equally profitable
• B) Company X will become less profitable than Company Y
• C) Company X will become more profitable than Company Y
• D) The effect cannot be determined without additional information

---

Definitions:

Concentration Ratio

A measure of the total market share that is controlled by a specified number of the largest firms in the industry.

Market Share

The portion of total industry revenue attributed to a specific company over a predetermined time frame.

Concentration Ratio

A measure of the market share controlled by the largest firms within an industry, used to indicate the degree of market competition.

Market Share

The percentage of an industry's sales that a particular company controls.