Final answer:
To find the break-even point, calculate total revenue by multiplying the quantity by the price and total cost similarly. When total revenue equals total cost, the profit is zero, indicating the break-even point. Different quantities and prices will result in profits or losses when comparing total revenue to total costs.
Step-by-step explanation:
To calculate total revenue and total cost for various quantities and find the break-even point, mathematical operations pertaining to multiplication and subtraction are applied.
For instance, with a quantity of 75 units and a price of $2.75 per unit, total revenue is determined by multiplying the quantity by the price. The calculation would be (75)($2.75), giving us a total revenue of $206.25. Similarly, the total cost is calculated using the same method since the average cost is also $2.75 per unit. Thus, the total cost is also (75)($2.75) or $206.25. Since total revenue equals total cost, the profit is zero, indicating the break-even point.
At a quantity of 40 units with a price of $16 per unit, the firm has a different scenario. The total revenue at this level is (40)($16) which is $640, and the total cost is (40)($14.50) or $580, resulting in a profit of $640 - $580, thus $60 profit.
When the quantity is 5 units at a price of $25 per unit, total revenue is (5)($25) equaling $125. However, the total costs of producing these 5 units are $130, resulting in a loss of $130 - $125, which is -$5.