The output where TC = TR & AC = AR:
Break-even point
Load point
Shut-down point
Revenue cost point
Correct Answer :
A. Break-even point
Break-even point?In economics & business, specifically cost accounting, the breakeven point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has broken even. A profit or a loss has not been made, although opportunity costs have been paid, and capital has received the riskadjusted, expected return.
Break even point is the level of sales at which profit is zero. According to this definition, at break even point sales are equal to fixed cost plus variable cost (b/c total cost is the sum of fixed cost and variable cost). This concept is further explained by the the following equation: [Break even sales = fixed cost + variable cost] The main advantages of break even point analysis is that it explains the relationship between cost, production, volume and returns. It can be extended to show how changes in fixed cost, variable cost, commodity prices, revenues will effect profit levels and break even points. Break even analysis is most useful when used with partial budgeting, capital budgeting techniques. The major benefits to use break even analysis is that it indicates the lowest amount of business activity necessary to prevent losses. Break-even price analysis calculates the price necessary at a given level of production to cover all costs. Break-even Point calculation � Calculation of the BEP can be done using the following formula:
BEP = TFC / (SUP - VCUP)
where:
BEP = break-even point (units of production)
TFC = total fixed costs,
VCUP = variable costs per unit of production,
SUP = selling price per unit of production. }
Related Questions
The Hicksian demand curve includes:
Substitution effect
Income effect
Both substitution and income effect
None of them
When elasticity of demand is one (e=1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
The production techniques are technically efficient:
Bellow the lower ridge line
Above the upper ridge line
Between the two ridge lines
On the upper ridge line
A dominant strategy can best be described as:
A strategy taken by a dominant firm
A strategy taken by a firm in order to dominate its rivals
A strategy that is optimal for a player no matter an opponent does
A strategy that leaves every player in a game better off
The equilibrium of a firm is determined by the equality of MC and MR in only:
Under perfect competition
Under monopoly
Under imperfect competition
Under all the above market forms
With the expansion of output, the short run average cost curve, beyond a point, starts rising because:
Average fixed cost increases sharply
More production yields lower per unit price
The law of variable proportions applies to short run production
Sales expenses become much larger
An inferior good/ commodity is inferior for:
Every consumer
Most consumers
All consumers
Some consumers and not for others
The firm in cournot model:
face costs
face taxes
donot face taxes
donot face costs
The law of Diminishing Marginal Utility implies that the marginal utility of a good decreases as:
It gets more expensive
A household consumes more of it
Preference changes
A households income goes up
The demand curve in monopolistic competition (also in kinked demand curve model), which shows the share of a firm in market is called:
Relative demand curve
Proportional demand curve
Productive demand curve
Differential demand curve
The total utility (TU) curve is:
Concave to X-axis
Convex to X-axis
Concave to Y-axis
Convex to Y-axis
All money costs can be regarded as:
Social costs
Opportunity costs
Explicit costs
Implicit costs
In cournot model, at equuilibrium when MC = MR, the elasticity of demand is:
equal to one
zero
negative
equal to 2
If the demand for good is less elastic and government levied a tax per unit of output, the price per unit for the firm would:
Rise by the amount of the tax
Rise by more than the amount of the tax
Rise by less than the amount of the tax
Remain the same
In cournot model, each firm expects a reaction from his rival but the expected reaction is not:
important
materialized
accepted
rejected
The isoquant which are generated by CES (constant elasticity of substitution) production function are always:
Positively sloped
Negatively sloped
Concave to the origin
None of the above
The demand of the luxuries is:
More elastic
Less elastic
Unit elastic
Zero elastic
Which of the following is not a characteristic of a perfectly competitive market?
There is perfect information about prices
All participants in the market are small relative to the size of the overall market
There are many buyers and sellers
Buyers and sellers do not know each other
A monopolist has control over the price he charges for his product. He will be able to maximize his profit by:
Lowering the price, if the demand curve is elastic
Lowering the price, if the demand curve is inelastic
Rising the price, if the demand curve is elastic
None of the above is applicable
The central problem of economics is:
Declining productivity
Increasing consumption
Limited material wants
Limited resources and unlimited wants
Normally when price per unit of time falls:
Quantity demanded increases
Quantity demanded decreases
Quantity demanded remains constant
Quantity demanded becomes zero
Price discrimination is possible:
When elasticities of demand in different markets are the same at the ruling price
When elasticities of demand are different in different markets at the ruling price
When elasticities cannot be known
When elasticities of demands are zero in different markets at the rulling price
For a commodity giving large consumers surplus, the demand will be:
Less elastic
More elastic
Unit elastic
Zero elastic
Price discrimination is undertaken with the aim of:
Increasing sales and maximizing profits
Reducing sales and raising prices
Minimizing cost and maximizing revenue
Serving the markets without earning profits
Slope of a demand curve is:
Not relevant to elasticity
The only factor determining elasticity
Only one of the factors influencing elasticity
None of the above
In Nash Equilibrium:
Each player has a dominant strategy
No players have a dominant strategy
At least one player has a dominant strategy
Players may or may not have dominant strategies
In monopolistic competition, the cost curves of all firms are:
Uniform
Different
Dependent
Independent
The modern cost curves are based upon the idea of:
Fixed capacity
Specific capacity
Excess capacity
Reserve capacity
The necessary condition of firms equilibrium requires:
dR/dQ + dC/dQ = 0
dR/dQ - dC/dQ = 0
dC/dQ - dR/dQ = 0
dR/dQ > dC/dQ > 0
For the equilibrium of the firm and the industry in the short period in a competitive market, the condition is:
P = AC
P = MC
AC = MC
MC = TR