Full Answer Section

For example, a business may choose to produce a lower volume of product at a higher price, even if it means that they will not break even immediately. This is because they may believe that the higher price will lead to higher profit margins and customer satisfaction.

Investment decisions are also extent decisions. Break-even analysis can be used to help businesses determine the minimum return on investment required for a project to be profitable. However, it does not take into account other factors that may be important to businesses, such as the risk of the project, the time horizon for the project, and the opportunity cost of the investment.

For example, a business may choose to invest in a project with a lower return on investment, even if it means that they will not break even immediately. This is because they may believe that the project has a lower risk, a shorter time horizon, or a higher opportunity cost.

In conclusion, pricing and production are extent decisions that should not be tackled with break-even analysis alone. Break-even analysis can be a helpful tool, but it is important to consider other factors as well. The same applies to investment decisions.