Final answer:
The break-even point for Davison Toaster Corp. cannot be calculated as the question lacks essential cost information. Economies of scale typically result in lower average costs at higher production levels, but this phenomenon caps at a certain point as illustrated in the figures provided. Option D is correct.
Step-by-step explanation:
The student's question relates to determining the break-even point for Davison Toaster Corp. Unfortunately, essential cost information is missing from the question, preventing us from calculating the break-even point. To find the break-even point, we need to know either the company's total fixed costs and variable costs per unit or just the total costs, none of which is provided here.
Looking at figures illustrating economies of scale, we can see that, in general, as the quantity of production increases, the average cost of production decreases. This holds true up to a certain level of production, beyond which the average cost does not decrease further. Figure 19.5, for example, shows that at plant L, the average cost is $10 per toaster oven for 150 units of output, which is lower compared to the cost at plants S and M due to economies of scale. Plant V, however, cannot produce more cheaply than plant L despite larger output.