CBSE Class 12-commerce Answered
Explain the break-even point with a diagram.
Asked by Topperlearning User | 25 Apr, 2016, 02:40: PM
Expert Answer
Break-even for a firm occurs when it is able to cover its all cost of production. Accordingly, break-even point is defined as a situation when AR = AC. Under this situation, the firm earns only normal profit.
The break-even point is graphically presented in the below figure. Break-even occurs at point Q. Here AR = AC. The firm is just making normal profits at break-even point.
Answered by | 25 Apr, 2016, 04:40: PM
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