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The Influence Of Price Change And Cost Structure On Profitability And Risk

Author

Listed:
  • Ivan Pavic

    (Faculty of Economics, Split, Croatia)

Abstract

One of the basic issues in the market economy is the volume of sales required for the overall income to cover total cost. The sales volume required to cover costs depends on the relationship between the function of the overall income and total cost. If the overall income and/or total cost function changes, the sales volume needed for the overall income to cover total cost also changes. The sales volume can be increased or decreased, depending on the change of direction of the relevant variables. This change then results in a profitability and risk change on the level of the actual sales volume.

Suggested Citation

  • Ivan Pavic, 2005. "The Influence Of Price Change And Cost Structure On Profitability And Risk," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 14(2), pages 183-200, december.
    • Handle: RePEc:avo:emipdu:v:14:y:2005:i:2:p:183-200
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    More about this item

    Keywords

    coverage point; profit; risk; business leverage power;
    All these keywords.

    JEL classification:

    • D29 - Microeconomics - - Production and Organizations - - - Other
    • M29 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Other

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