Final answer:
If sales volume exceeds the break-even point, the firm will experience an operating profit, as costs have been covered and additional sales contribute to profit.
Step-by-step explanation:
If sales volume exceeds the break-even point, the firm will experience an operating profit. The break-even point is where a company's revenues are equal to its total costs, meaning the company is earning zero profit. Any sales volume above this point results in profit because the fixed costs have been covered and each additional unit sold contributes to profit above the total cost. According to Figure 8.6, remaining open and continuing production is favorable when the price exceeds the firm's average variable cost. If the firm's price is above the level where marginal cost (MC) crosses average cost (AC) at the zero profit point, the firm earns profits. Conversely, having prices in the zone between the break-even point and the shutdown point, although constituting a loss, is still preferable to shutting down if variable costs are being covered.