Regarding break-even analysis, a good marketing manager knows that:
A) a high fixed-cost contribution per unit will lead to high profits.
B) assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price.
C) break-even analysis is useless for comparing pricing alternatives.
D) the usual straight-line total cost curve applies only when economies of scale exist.
E) All of these alternatives are correct.

Question

Quizplus · Accepted Answer

Assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price. This is because it does not account for the potential changes in price or demand at different levels of output, which can significantly impact the accuracy of break-even analysis.

Regarding Break-Even Analysis, a Good Marketing Manager Knows That