THE INFLUENCE OF PRICE CHANGE AND COST STRUCTURE ON PROFITABILITY AND RISK

Ivan Pavic
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Ivan Pavic: Faculty of Economics, Split, Croatia

Economic Thought and Practice, 2005, vol. 14, issue 2, 183-200

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.

Keywords: coverage point; profit; risk; business leverage power (search for similar items in EconPapers)
JEL-codes: D29 M29 (search for similar items in EconPapers)
Date: 2005
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