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Question

Assuming that you are a business manager, in order to achieve breakeven profit, you may consider changing three variables of unit sold, unit selling price and fixed costs. Explain critically what constraint(s) that prohibits you from choosing each variable.

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Answer 1

最佳解答

Unit sold - Just because you want to sell more, doesn't mean the customers

want to buy more. The constraint is the demand of the product.

Selling price - If you charge more, the customer may not buy at all. The

constraint is the supply and demand of the product. In economic terms,

this has to do with elasticity of demand.

Fixed costs - This is perhaps the easiest to control by the business manager.

He can lower costs for labour, office supplies, etc. However, a company

cannot cut cost forever. There is a min. cost required to keep the business

running and the stores opened.

Good luck.