A company wants to increase overall profitability by only increasing its product's selling price. Which effect should this have?

When a company increases its product's selling price, consumers may feel that the product is no longer worth the cost, prompting them to explore alternative options. This behavior is particularly common in competitive markets where substitutes are readily available, thus negatively affecting sales volume and potentially harming profitability.

While increasing the selling price can raise the breakeven point in terms of revenue, the number of units needed to break even does not necessarily increase. In fact, fewer units may need to be sold to cover fixed costs if the price rises, making this statement incorrect in context. The breakeven point does not directly correlate with customer behavior regarding substitutes.

Fixed costs per unit are determined by total fixed costs divided by the number of units produced. An increase in selling price does not influence fixed costs; hence, this choice is misleading. The fixed cost per unit would actually decrease if fewer units are sold at a higher price, which is contrary to the claim.