Assuming linear total cost and linear revenue functions

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1. When the variable cost is reduced (assuming linear total cost and linear revenue functions), the breakeven point decreases. This is an economic advantage because:

a. The revenue per unit will increase

b. The two lines will now cross at zero

c. The total cost line becomes nonlinear

d. The profit will increase for the same revenue per unit

2. An analyst conducting an economic analysis used an inflated interest rate of 16% per year in all calculations. If the real interest rate at the time of the calculations was 12% per year, the inflation rate was equal to:

a. 3.57%

b. 5.28%

c. 8.36%

d. 13.29%

Reference no: EM131112920

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