## DragIT - Break-even price changes

Click and hold on the total revenue curve and drag it to see the impact of changes in price. Then have a go at the questions below.

1

##### Break-even price changes

As price increases the level of break-even output will rise.

 a) True b) False Yes, that's correct. The statement is false. As price rises, the level of break-even output will fall.No, that's not right. The statement is false. As price rises, the level of break-even output will fall. Try dragging the total revenue curve upwards to the left and see what happens to break-even.Your answer has been saved.

2

##### Break-even price changes

As price falls the total revenue curve will shift downwards.

 a) True b) False Yes, that's correct. The statement is true. As price falls, the total revenue curve shifts downwards and to the right.No, that's not right. The statement is true. As price falls, the total revenue curve shifts downwards and to the right.Your answer has been saved.

3

##### Break-even price increase

If the firm increases their price, which of the following changes will occur? (Try dragging the total revenue curve in the above diagram upwards to the right to see the impact)

 a) The break-even level of output will fall b) Profit at the existing level of output will fall c) The total revenue curve will shift upwards to the left d) The break-even level of output will rise e) The total revenue curve will shift downwards to the right a) Yes, that's correct. A price increase will shift the total revenue curve upwards to the left and so the break-even level of output will fall.a) No, that's not right. A price increase will shift the total revenue curve upwards to the left and so the break-even level of output will fall.b) Yes, that's correct. A price increase will shift the total revenue curve upwards to the left and so profit will rise at the existing level of output.b) No, that's not right. A price increase will shift the total revenue curve upwards to the left and so profit will rise at the existing level of output.c) Yes, that's correct. A price increase will shift the total revenue curve upwards to the left.c) No, that's not right. A price increase will shift the total revenue curve upwards to the left.d) Yes, that's correct. A price increase will shift the total revenue curve upwards to the left and so break-even output will fall.d) No, that's not right. A price increase will shift the total revenue curve upwards to the left and so break-even output will fall.e) Yes, that's correct. A price increase will shift the total revenue curve upwards to the left.e) No, that's not right. A price increase will shift the total revenue curve upwards to the left.