If the sales output of a firm increases, the break-even point will:Group of answer choicesincrease.stay the same.reduce.equal the margin of safety.
Question
If the sales output of a firm increases, the break-even point will:Group of answer choicesincrease.stay the same.reduce.equal the margin of safety.
Solution
The answer is "reduce."
Here's why:
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The break-even point is the point at which total revenue equals total costs. At this point, a business is not making a profit or a loss.
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If the sales output of a firm increases, it means the firm is selling more units.
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With more units being sold, the firm is generating more revenue. This means it can cover its costs quicker and reach the break-even point with fewer units.
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Therefore, when the sales output of a firm increases, the break-even point will reduce.
The other options are incorrect. The break-even point does not increase or stay the same, and it is not equal to the margin of safety. The margin of safety is the difference between the actual or expected sales and the sales at the break-even point.
Similar Questions
When the sales price increases and the costs function remains unchanged:Group of answer choicesBreak-even output decreases.Break-even output remains the same.Break-even output increases.Total fixed costs decrease.
An increase in selling price .a.increases the break-even point.b.does not affect the break-even point.c.optimize the break even point.d.decreases the break-even point.
Fill in the Blank QuestionFill in the blank question.The break-even point can be expressed as sales in or .
What does the break-even point represent?a.The target market shareb.The minimum sales volume needed to cover costsc.The total market potentiald.The point of maximum profit
Imagine that doubling the quantity of all inputs in the production, more than doubles the quantity of output. The firm: Group of answer choicesshould shut down because it is not producing at an efficient scaleis experiencing increasing marginal productis on the elastic part of the supply functionis experiencing increasing returns to scaleNone of the other answers is correct
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