Give an example of a case where a cost and a revenue function do not have a break-even point.
Answer (2)
A break-even point is where total revenue equals total costs. If a company’s costs are structured such that they always exceed revenue, they will not have a break-even point. An example scenario shows a cost function that results in continuous losses without intersecting the revenue function.
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A break-even point occurs when total revenue equals total costs; however, it can be absent in certain cases. For example, if a company has high fixed costs and low revenue per unit, their cost function may never intersect their revenue function. This situation leads to continuous losses without a feasible production solution. ;
