Suppose Fixed Expenses Were to Increase by 5

question 23

Multiple Choice

Suppose fixed expenses were to increase by 5.9 per cent. How would this affect the break-even point?

• A) The break-even point in units would rise 5.9 per cent.
• B) The break-even point in dollars would rise 11.8 per cent.
• C) The break-even point in dollars would rise by more than 5.9 per cent.
• D) The break-even point in dollars would fall by more than 5.9 per cent.

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Definitions:

Strong Relationship

A significant association or correlation between two or more variables where changes in one variable are closely linked to changes in the other(s).

Exponential

Relating to a mathematical function or model that describes exponential growth or decay, where the rate of change is proportional to the current value.

Linear

Pertaining to or resembling a line; involving a sequence of events or elements that proceed in a straight or direct path with no deviations.

Fuel Efficiency

A measure of how far a vehicle can travel on a specified amount of fuel, usually expressed in miles per gallon (mpg) or liters per 100 kilometers (l/100km).