Which of the following will increase the price needed to break even?
A)A decrease in overall fixed costs
B)A decrease in the marginal costs
C)An increase in fixed costs
D)An increase in the level of production

Question

​Which of the following will increase the price needed to break even?
A)​A decrease in overall fixed costs
B)A decrease in the marginal costs
C)An increase in fixed costs
D)​An increase in the level of production

Quizplus · Accepted Answer

When fixed costs increase, the price needed to break even also increases as there are now higher expenses that need to be covered before any profit can be made. On the other hand, a decrease in overall fixed costs (Option A) would lower the break-even price. A decrease in marginal costs (Option B) would also reduce the break-even price since it costs less to produce each unit thus lowering the overall expense. An increase in the level of production (Option D) may or may not increase the break-even price, depending on the impact on fixed and marginal costs.

​Which of the Following Will Increase the Price Needed to Break

Which of the Following Will Increase the Price Needed to Break