Final answer:
The method used to find the minimum sales needed to cover all costs is called break-even analysis, a critical financial concept for determining when a business neither loses nor gains money.
Step-by-step explanation:
The method of determining the least amount of sales required at a certain price in order to account for all fixed and variable costs is known as break-even analysis. This financial calculation is crucial for a business to understand at what point it would not incur a loss or make a profit.
By analyzing fixed and variable costs, and combining these with an analysis of sales and revenue, a business can determine the profit-maximizing quantity to produce and the appropriate pricing strategy within the market structure in which it operates.
In the context of the price elasticity of demand, the strategy for maximizing revenue would vary. If the demand is elastic, lowering prices can increase quantity sold and revenue. Conversely, if the demand is inelastic, increasing prices might lead to higher revenue as the decrease in quantity sold is outpaced by the price increase.