A Typical Break-Even Analysis Assumes That

question 84

Multiple Choice

A typical break-even analysis assumes that:

• A) the total revenue curve is a straight line.
• B) the demand curve faced by the firm is horizontal.
• C) the average variable cost is the same at different levels of output.
• D) profits will grow continually beyond the break-even point.
• E) All of these are assumptions of a typical break-even analysis.

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Definitions:

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts or funds obtained from special financing sources.

Labor

The utilization of human physical and intellectual capacities in the generation of goods and services.

Plausible

Seeming reasonable or probable under the circumstances.

Production Function

A mathematical model that describes the relationship between inputs used in production and the resultant output.