What assumption does break-even analysis make that limits its overall usefulness?
A) It focuses on how to achieve a price objective.
B) It assumes a company wants to gain a certain market share.
C) It relies on demand for a product being inelastic.
D) It focuses only on competitive factors and not costs.
E) It assumes that demand is elastic for the product.

Question

Quizplus · Accepted Answer

Break-even analysis assumes that demand is inelastic, meaning it does not change with price fluctuations, which limits its usefulness in dynamic markets where demand can be elastic.

What Assumption Does Break-Even Analysis Make That Limits Its Overall