A business raises the selling price while costs stay the same. What happens to break-even output?

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Question

A business raises the selling price while costs stay the same. What happens to break-even output?

Accepted Answer

It falls, because contribution per unit rises — Award 1 mark. Fewer units are then needed to cover the same fixed costs. Cutting variable cost per unit has the same effect.

Answer

It stays the same, since fixed costs are unchanged

Answer

It falls, because contribution per unit rises

Answer

It rises, because revenue per unit is higher

Answer

It cannot be determined without knowing output

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