Answer to Question #155383 in Management for salman

Question

in a perfectly competitive market, the break even point is a point where ?

Answer 1

Break-Even Point

Among competing business, there is always the question of the one that will set the market price. However, in a competitive environment, the participants cannot set the market prices for a particular product. The price is determined by other market forces associated with demand and supply. As a result, the participants can only strategize on how to market their product using a particular market price. However, break-even point is related to marginal costs and average total cost. In this case, this is achieved when the two aspects equal each other (MC=ATC) (Potkany & Krajcirova, 2015). For instance, a company can be said to be selling at break-even prices when its marginal revenue offsets the cost of production as well a situation where the revenue earned offsets the total cost.

Reference

Potkany, M., & Krajcirova, L. (2015). Quantification of the Volume of Products to Achieve the Break-Even Point and Desired Profit in Non-Homogeneous Production. Procedia Economics And Finance, 26, 194-201. https://doi.org/10.1016/s2212-5671(15)00811-4