On a profit-volume graph, the intersection of the profit line with the vertical axis provides a
A)profit of £1,000.
B)profit equal to zero.
C)profit equal to fixed costs.
D)loss equal to fixed costs.

Question

Quizplus · Accepted Answer

The intersection of the profit line with the vertical axis on a profit-volume graph represents the point where no units are sold, thus indicating a loss equal to the total fixed costs. This is because, with zero sales, there are no variable costs or revenues, leaving only fixed costs as losses.

On a Profit-Volume Graph, the Intersection of the Profit Line