If the Sales Price Per Unit Decreases Because of Competition

question 40

Multiple Choice

If the sales price per unit decreases because of competition but the cost structure remains the same

• A) the break-even point rises.
• B) the degree of combined leverage declines.
• C) the degree of financial leverage declines.
• D) All of the options are true.

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Definitions:

Equitable Remedies

Remedies granted by courts in situations where monetary damages are insufficient, including injunctions or specific performance.

Specific Performance

An equitable remedy requiring exactly the performance that was specified in a contract. Usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique, for example, real property.

Injunction

A court decree ordering a person to do or to refrain from doing a certain act.

Capital Asset Pricing Model

The Capital Asset Pricing Model (CAPM) is a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.