Question
Explain the break-even point.
✓
Answer
Break-even for a firm occurs when it is able to cover all its costs of production. Accordingly, break-even point is defined as a situation when AR = AC or TR = TC. This is a condition of ‘no profit-no loss' for the firm. But, still the firms are able to earn normal profits, as normal profits are an element of cost.
Break-even occurs at points S.
Here, AR = AC.
Break-even occurs at points S.
Here, AR = AC.
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