What happens when total cost and total revenue are equal?
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What happens when total cost and total revenue are equal?
When the total revenue is equal to the total cost, the firm is not making any additional profit but is also not in loss. The earnings are equal to the expense hence it is called the break even point.
What is it called when total revenue is equal to total cost?
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. “even”.
What is the relationship between total cost and total revenue?
The basic difference between Total cost and total revenue is that the total cost includes the total expenditure incurred on the production of a commodity whereas total revenue refers to the money received from selling that commodity.
What is marginal cost curve?
The marginal cost (MC) curve is defined as the change in total cost divided by the change in energy output. Under perfectly competitive markets, the MC curve is the same as the firm’s supply curve.
How do you graph marginal cost?
To graph a marginal cost (MC) curve, plot the costs associated with various outputs that you derived from the previous lecture. Plot the MC on the vertical axis and the total product on the horizontal axis. You can connect the points because the points you found are not all the possible MC and TP combinations.
Where is total cost equal to total sales?
the break even point
When the total revenue is equal to the total cost, the firm is not making any additional profit but is also not in loss. The earnings are equal to the expense hence it is called the break even point.
What indicates the close relationship that exists between cost and revenue?
What Is Profit? Profit is the income left over after the cost of production is paid for with revenue. The Dummies website explains it as the difference between total revenue and total cost.
How do you plot a BEP graph?
Drawing a break-even diagram
- Step 1 Extract the data. Extract the data required from the question or text.
- Step 2 Calculate the BEQ. The break-even formula is relatively simple:
- Step 3 Fix the X axis (capacity)
- Step 4 Fix the Y axis (revenue and costs)
- Step 5 Plot the TR axis.
- Step 6 Add the FC line.
- Step 7 Add the TC Line.
How do you graph a marginal curve?
How do you graph a total cost curve?
The total cost curve graphically represents the relation between total cost and the quantity of production. This curve can be derived in two ways. One is to plot a schedule of numbers relating output quantity and total cost. The other is to vertically add the total variable cost curve and the total fixed cost curve.
