What is the simple meaning of the break-even point?
Answer and explanation
Correct answer: The point where total revenue and total expenses are equal
The break-even point is the level of sales or activity at which total revenue equals total cost, including fixed and variable costs. At this point, the business has neither profit nor loss. If sales rise above this level, profit may occur; if they fall below it, loss may occur, assuming other conditions remain unchanged. Therefore, option A is correct, while zero expenses and no customers are not its meaning.
Frequently asked questions
What is the correct answer to this question?
The point where total revenue and total expenses are equal
Why is this the correct answer?
The break-even point is the level of sales or activity at which total revenue equals total cost, including fixed and variable costs. At this point, the business has neither profit nor loss. If sales rise above this level, profit may occur; if they fall below it, loss may occur, assuming other conditions remain unchanged. Therefore, option A is correct, while zero expenses and no customers are not its meaning.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce.
