An advantage of breakeven analysis is that it can be applied with equal precision whether a firm's cost curve is linear or nonlinear.

Question

Quizplus · Accepted Answer

The statement is false because breakeven analysis assumes that cost curves are linear, which means that the relationship between costs and output is fixed and consistent. Nonlinear cost curves, on the other hand, have changing shapes and slopes, making it difficult to determine the precise point where the firm's total costs equal its total revenue.

An Advantage of Breakeven Analysis Is That It Can Be