Final answer:
The break-even point does not represent the number of units required to be produced to meet the annual profit goal. It represents the level of output where a firm's profits are zero, which occurs when total revenue equals total costs, and is where the marginal cost curve intersects the average cost at its minimum point.
Step-by-step explanation:
The student has asked which of the following is not true about the break-even point. The correct answer is that the break-even point does not represent the number of units required to be produced to meet the annual profit goal. This is because the break-even point is the level of output where the firm's profits are zero, meaning it is the point where the firm's revenue is equal to its total costs (both variable and fixed costs) but not necessarily aligned with any profit goals.
The break-even point is the level of output where the marginal cost curve intersects the average cost curve at the minimum point of AC. At the break-even point, the price of the product is such that the firm is earning zero economic profits. In long-run equilibrium, all firms earn zero economic profits producing at an output level where P = MR = MC and P = AC. This situation also informs decisions regarding entry into and exit from the market.