Company X Has Variable Costs Per Unit of $20,fixed Costs

question 138

Multiple Choice

Company X has variable costs per unit of $20,fixed costs of $300,000,and a break-even point in units of 60,000 units.If the sales price per unit decreases by $2 and the variable cost per unit decreases by $2,what would happen to the break-even point?

• A) Break-even point increases.
• B) Break-even point in dollars decreases.
• C) Break-even point stays the same.
• D) Break-even point in dollars decreases and break-even point in units stays the same.

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Definitions:

Profit-Maximizing Firms

Businesses that operate with the primary goal of maximizing their profit, which is achieved by increasing income while minimizing costs.

Economic Factors

The various external factors, such as inflation, interest rates, and unemployment, that influence the performance of the economy.

Cattle Ranchers

Individuals or businesses engaged in the raising and breeding of cattle for meat or milk production.

Marginal Revenue

The additional income generated from the sale of one more unit of a good or service.