If Fixed Costs Decrease, but Variable Cost and Price Remain

question 120

Multiple Choice

If fixed costs decrease, but variable cost and price remain the same, the break-even point

• A) decreases.
• B) increases.
• C) remains the same.
• D) may increase or decrease depending on sales.

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Definitions:

Pure Competition

A market structure characterized by a large number of small firms selling identical products, with no single seller having a significant influence on market price.

Oligopoly

A market structure characterized by a small number of large firms dominating the market, leading to limited competition.

Mutually Cancelling Advertising

Mutually cancelling advertising refers to a situation where the competitive advertising efforts of firms negate each other's impact, leading to no significant change in market share.

Economic Efficiency

A state in which resources are allocated in the most beneficial way, maximizing output while minimizing waste and inefficiency.