If the price per unit decreases because of competition but the cost structure remains the same
A) the break-even point rises.
B) the degree of combined leverage declines.
C) the degree of financial leverage declines.
D) all of the other answers are correct

Question

Quizplus · Accepted Answer

If the price per unit decreases, the contribution margin per unit decrease as well. As the contribution margin is what covers fixed costs, a decrease in the price per unit will increase the break-even point, which is the sales level at which the company generates zero profits.

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