What Does a Break-Even Point of 100 Units Mean to a Firm

question 118

Multiple Choice

What does a break-even point of 100 units mean to a firm?

• A) The firm must sell 100 units to maximize its profits.
• B) Fixed costs plus variable costs equals 100 units.
• C) By producing 100 units, the firm can ensure that variable costs completely cancel its fixed costs.
• D) If the firm sells 100 units, its total revenues will equal its total costs.

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Definitions:

Profit-maximizing

The process of identifying the output level at which a business can achieve the highest possible profit.

Cost Data

Information related to the expenses incurred in the production, operation, or provision of services, used for analysis and decision-making purposes.

Demand Data

Information on the quantity of a product or service that consumers are willing and able to purchase at various prices during a certain period.

Profit-maximizing

The approach a corporation takes to ascertain the price and quantity of output that yields the maximum profit.