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Author Question: What are the limitations in using break-even analysis? What will be an ideal ... (Read 52 times)

ghost!

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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.


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Heffejeff

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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


ghost!

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Reply 2 on: Jul 1, 2018
Great answer, keep it coming :)

tranoy

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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