The Campaign for Better Politicians expects to have 5,000 in fixed costs. If its fixed costs do not change, but the amount of money each marcher raises through pledges (price/unit) increases from $60 to $75, and the variable cost/unit increases from $40 to $50, the break-even number of marchers will:

1. Increase
2. Decline
3. Stay the same

Now, assume that the Campaign for Better Politicians marching event has step-fixed rather than fixed costs.  What does this mean for the application of the break-even formula?

1. The break-even formula applies the same to step-fixed and fixed costs
2. The break-even formula will only apply if the number of marchers is in the range within costs that are fixed
3. The break-even formula cannot be applied in this circumstance
4. Whether the break-even formula can be applied depends on the structure of the marginal cost function

Answer rating: 100% (QA)

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