Gerhard Explains the Concept of Break-Even Analysis to His Father

question 92

Essay

Gerhard explains the concept of break-even analysis to his father who owns a daycare center and needs to decide how many children he needs to take in.Gerhard's father grimaces,saying,that break-even analysis is too simplistic and won't work for him.What specific limitations associated with break-even analysis will Gerhard's father probably point out?

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Definitions:

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Unemployment

The condition in which people actively seeking work are unable to find employment.

Long Run

The long run is a period in economics in which all factors of production and costs are variable, allowing for full adjustment to change.

Unemployment

Unemployment refers to the situation when individuals who are able and willing to work are not able to find employment.