Draw two break-even graphs-one for a conservative firm using labor-intensive production and another for a capital-intensive firm. Assuming these companies compete within the same industry and have identical sales, explain the impact of changes in sales volume on both firms' profits.
Based on the following assumtions draw two break-even graphs.
|
|
Labor |
Capital |
|
|
Intensive |
Intensive |
| Selling price |
|
$12.00 |
$12.00 |
| Variable cost per unit |
$8.00 |
$5.00 |
| Fixed costs |
|
$200,000 |
$300,000 |