Assuming there are no step-fixed costs, if marginal cost is greater than marginal revenue, the following...
Assuming there are no step-fixed costs, if marginal cost is greater than marginal revenue, the following must be true in order to break-even (select one):
- A. Fixed costs must be more than fixed revenues
- B. Fixed costs must be less than fixed revenues
- C. Cannot tell from the information given
- D. Fixed costs must be equal to fixed revenues
Homework Answers
Marginal Costs/Revenues are cost/revenue incurred/earned for/by producing/selling EVERY ADDITIONAL UNIT.
Now, if we want to Break-Even i.e. incur no loss or make no profit, there must be MORE REVENUE to SET-OFF the additional Cost incurred.
Therefore, Fixed Costs must be LESS THAN Fixed Revenues.
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