Author Question: What are the limitations in using break-even analysis? What will be an ideal ... (Read 23 times)

ghost! · **on:** Jul 1, 2018

What are the limitations in using break-even analysis?

What will be an ideal response?

Question 2

If the government regulates the price a monopoly can charge, and the price ceiling is set below what the competitive market price would be, then

A) a shortage will exist.
B) a surplus will exist.
C) producer surplus is maximized.
D) consumer surplus is maximized.

Heffejeff · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

It requires the use of linear cost and revenue functions; it isn't applicable if the functions are non-linear. It assumes that there are fixed costs, which means the analysis can be applied only to short-run operations. It can't handle multiple product situations, unless the product mixes are constant. It can't be used to determine profit-maximizing levels of operations.

Answer to Question 2

A