The breakeven point determines at which point to halt production because sales beyond the breakeven point result in losses to the firm.

Question

Quizplus · Accepted Answer

The breakeven point is the level of production or sales at which the revenue generated by the firm equals the total costs, resulting in neither profit nor loss. Sales beyond the breakeven point result in profits for the firm, not losses, as fixed costs have already been covered by the breakeven point. Therefore, production should continue beyond the breakeven point as long as there is demand and profitability for the firm.

The Breakeven Point Determines at Which Point to Halt Production