Break-even analysis
A) assumes that the demand curve is perfectly horizontal at the selling price.
B) reveals the price that will earn the highest profit.
C) cannot be used for comparing several different alternatives (for example, assuming different prices).
D) all of the above.
E) none of the above.

Question

Quizplus · Accepted Answer

Break-even analysis assumes that the demand curve is perfectly horizontal at the selling price, which means that the quantity demanded will remain constant at any given price. It helps to determine the minimum quantity of goods or services that must be sold in order to cover the total costs of production. It does not reveal the price that will earn the highest profit, nor can it be used for comparing several different alternatives (for example, assuming different prices).

Break-Even Analysis