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Price Change Worksheet - Break-Even Analysis [Virtual Learning Arcade]

The Virtual Learning Arcade is a series of models and simulations on various economics and business topics. Each simulation has a range of supporting materials including interactive worksheets, theoretical explanations and multiple choice questions. This simulation is based on a firm West Country Shipping. This page gives a theoretical explanation of profit maximisation.

Break Even Analysis: A Decrease in Price

The aim of the question below is to interpret the consequences of an increase in price on the break-even point.

If the price of the good increased and output remained constant, the margin of safety would (select one answer)

(a) unmarked question increase
(b) unmarked question decrease
(c) unmarked question unknown
(b) unmarked question remain the same

Analysts predict that there will be a large shift way from oil based transport over the next two years. They expect that the knock on effect is that the oil equipment transport price will fall to £8.50 over the next year.

Comment on the impact on the firm; its profits, break-even mileage and the new margin of safety.; Try This

(Type your answer to the previous question in the box below, then click on explain)


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Submitted by bized on Wed, 14/03/2001 - 13:00