29 Gomez thinks the best way to lower the break-even point is to raise prices. Do you agree? Justify your answer. [6]

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Gomez is the manager of a small computer repair business. The Table shows some costs and prices for his business. As it is a competitive market, Gomez knows it is important to maintain customer loyalty and revenue. Gomez knows that a lower break-even point would help improve profits. He thinks the best way to lower the break-even point is to raise prices.

COST AND PRICE INFO.JPG (13.17 KiB) Viewed 276 times

29 Gomez thinks the best way to lower the break-even point is to raise prices. Do you agree? Justify your answer. [6]

Possible KN Points:
• raise in price will increase revenue
• effect of elasticity
• depends on actions of competitors
• is the business able to lower costs
• lower costs