Chapter 6.4, Problem 21MCQ

To determine

Toshow :what would it mean a break even point for a business has no solution.

Explanation of Solution

Given information: system of equations which on solving gives no solution.

Solution:The break even point for a business can be calculated on dividing the fixed cost of production by the difference between price per unit and the variable cost of production and is shown as,

  $BEP=\frac{FC}{PP-VP}$

Systems of equation does not mean that all the time we will get the solution. While interms of business, this means that no matter what value you put in for the variable, there's always a dispute. In business, no matter how we apply the best resources and process or extra efforts it will always remain unpredictable and the result may or may not be in our favour.

There is no net loss or gain in the business when break even point has no solution even though the opportunity costs have been paid and capital has received the risk-adjusted