If the price per unit decreases because of competition but the cost structure remains the same:
A) the break-even point increases.
B) the break-even point decreases.
C) the degree of financial leverage declines.
D) the degree of combined leverage declines.

Question

Quizplus · Accepted Answer

When the price per unit decreases, the revenue per unit also decreases. Therefore, more units need to be sold to cover the fixed costs, which increases the break-even point.

If the Price Per Unit Decreases Because of Competition but the Cost