Break-Even Point

Break-Even Quantity

The break-even quantity is where exact profit reaches zero.

highlighted = computed this step

Zero profit

Break-even means profit is exactly $0. That is the crossing of revenue and total cost.

Π(q)=$0\Pi(q)=\$0
Break-even pointThe labeled crossing is where revenue equals total cost.break-even point01012$0$100$140revenuetotal costbreak-even q=10quantitydollars

Cover fixed cost

Each unit contributes $6, so fixed cost $60 is covered after enough units.

$6q=$60\$6q=\$60
Break-even pointThe labeled crossing is where revenue equals total cost.break-even point01012$0$100$140revenuetotal costbreak-even q=10quantitydollars

Break-even quantity

The exact break-even quantity is 10 units.

q∗=10q^*=10
Break-even pointThe labeled crossing is where revenue equals total cost.break-even point01012$0$100$140revenuetotal costbreak-even q=10quantitydollars

Same dollars

At that quantity, revenue and total cost are both $100.

R(q∗)=C(q∗)=$100R(q^*)=C(q^*)=\$100
Break-even pointThe labeled crossing is where revenue equals total cost.break-even point01012$0$100$140revenuetotal costbreak-even q=10quantitydollars