If the price per unit decreases because of competition but the cost structure remains the same
A) the breakeven point rises.
B) the degree of combined leverage declines.
C) the degree of financial leverage declines.
D) All of these

Question

Quizplus · Accepted Answer

If the price per unit decreases due to competition but the cost structure remains the same, the breakeven point will rise. This is because the decrease in price means that more units must be sold to cover the same fixed costs. The degree of combined leverage and the degree of financial leverage would also be affected, but not as directly as the breakeven point.

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