Final answer:
The break-even point is where income equals expenses, an important concept indicating the equilibrium in a business or economy when total spending matches total production. the correct option is c) Break-even point.
Step-by-step explanation:
income equals expenses:
The break-even point is the correct answer and represents the moment when income and expenses are equal. This point is critical for businesses to understand, as it indicates when they will start to generate profit or cover their costs without making a loss. In terms of a graphic representation, such as in the Keynesian Cross Model, the break-even point occurs where the aggregate expenditure line crosses the 45-degree line, which indicates that total spending equals total production. This is an essential concept in economics as well, showing the point of equilibrium for the economy.
For example, let's say a company has $10,000 in fixed costs (such as rent, salaries, and utilities) and sells a product for $20 each with a variable cost of $10. To calculate the break-even point, you divide the fixed costs by the difference between the selling price and the variable cost: $10,000 / ($20 - $10) = 1,000 units. Therefore, the break-even point for this company is 1,000 units, where the income equals the expenses.