Say we have a result, z.
The result is determined by dividing x over y (i.e. x/y)
If the numerator (x) increases by 10%, the result (z) increases by 10%.
However if the denominator (y) decreases by 10%, why does that result (z) not increase by 10% too?
For a more specific example:
The break-even point (in units) is calculated as: Fixed Costs, divided by the unit selling price minus the unit variable cost.
If fixed costs increase by 10%, the break-even point increases by 10%.
However, if unit variable cost increases by 10% (i.e. thus decreasing the denominator by 10%), why doesn't the break-even point also increase by 10%?
Any help would be great, thank you
The result is determined by dividing x over y (i.e. x/y)
If the numerator (x) increases by 10%, the result (z) increases by 10%.
However if the denominator (y) decreases by 10%, why does that result (z) not increase by 10% too?
For a more specific example:
The break-even point (in units) is calculated as: Fixed Costs, divided by the unit selling price minus the unit variable cost.
If fixed costs increase by 10%, the break-even point increases by 10%.
However, if unit variable cost increases by 10% (i.e. thus decreasing the denominator by 10%), why doesn't the break-even point also increase by 10%?
Any help would be great, thank you
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