Asked by Cameron Brown on Jun 10, 2024
Verified
If a firm sells more than the break-even quantity,
A) It will make a profit
B) It will only cover the variable costs
C) It will make a loss
D) A firm is unable to sell above the break-even quantity
Break-even Quantity
The volume of production or sales at which total revenues equal total costs, resulting in no net loss or gain for a business.
Variable Costs
Expenses that fluctuate with the level of output or production activity.
Profit
The financial gain realized when the revenue from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.
- Illustrate and evaluate the break-even quantity, considering its role in guiding business decisions.
- Analyze the impact of price changes on break-even quantity and business strategy.
Verified Answer
JN
johnny nguyenJun 10, 2024
Final Answer :
A
Explanation :
If a firm sells more than the break-even quantity, it will make a profit. The break-even quantity is the point where the total revenue equals the total cost, including fixed and variable costs. Therefore, any quantity sold above the break-even point will generate a profit.
Learning Objectives
- Illustrate and evaluate the break-even quantity, considering its role in guiding business decisions.
- Analyze the impact of price changes on break-even quantity and business strategy.