Which One of the Following Statements About Break-Even Analysis for Evaluating

question 18

Multiple Choice

Which one of the following statements about break-even analysis for evaluating products or services is true?

• A)The break-even quantity will tend to increase as the variable cost per unit of production decreases.
• B)As sales increase beyond the break-even quantity,total before-tax profits tend to decrease.
• C)A restaurant's opening of downsized facilities with only drive-through service is an example of lowering fixed costs and the break-even quantity.
• D)Increasing the unit selling price has the effect of increasing the break-even quantity.

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Definitions:

Producer Surplus

The difference between what producers are willing and able to supply a good for and the price they actually receive, measuring the benefit to producers.

Total Surplus

The total net gain to society from creating and consuming a product or service, encompassed by the combination of consumer and producer surplus.

Deadweight Loss

An inefficiency in the economy that results when the market equilibrium for a good or service isn't attained or is unattainable.

Tariff

A tax imposed on imported or, less commonly, exported goods with the aim of raising the cost to influence trade dynamics.