A firm that has total fixed costs of $20,000 sells its output for $150 per unit and has an average variable cost of $200. If the firm's cost and revenue curves are linear, how much output must the firm produce to break even?
A) 500
B) 400
C) 300
D) The firm cannot break even.

Question

Quizplus · Accepted Answer

Given the average variable cost ($200) is higher than the price per unit ($150), the firm incurs a loss on each unit sold, making it impossible to break even regardless of the quantity produced.

A Firm That Has Total Fixed Costs of $20,000 Sells