Which of the following statements is true about break-even analysis?
A) It assumes that the demand curve is perfectly horizontal at the selling price.
B) It reveals the price that will earn the highest profit.
C) It cannot be used for comparing several different alternatives (for example, assuming different prices).
D) It considers the effect of price on the quantity that consumers will want.
E) It helps to compute break-even point in units alone.

Question

Quizplus · Accepted Answer

Break-even analysis assumes that the demand curve is perfectly horizontal at the selling price. In fact, most managers face down-sloping demand situations.

Which of the Following Statements Is True About Break-Even Analysis