Final answer:
To calculate the break-even point, the revenue and cost functions must be set equal to each other. A profit or loss can be assessed by comparing the total revenue with the total cost at various output levels, and this is visually presented through AC, MC, and AVC curves on a graph.
Step-by-step explanation:
The question relates to the determination of a break-even point and the analysis of profit and loss for a company selling notebook computers at different prices. The break-even point is where the revenue (R) function and cost (C) function intersect, meaning they are equal, which indicates the company neither makes a profit nor incurs a loss. Mathematical calculations are used to find the level of output (x) at which R(x) = C(x).
To determine if the company makes a profit or loss at a selling price of $500, one must compare the total revenue to the total cost at different levels of output. For example, if the firm sells 40 units at $16 each (total revenue of $640) and its total cost is $580, then the profit is total revenue minus total cost ($640 - $580 = $60). However, if the computers are sold at $300, we would need to conduct a similar calculation to establish the profit or loss.
A visual representation of this situation can be illustrated through graphs showing average cost (AC), marginal cost (MC), and average variable cost (AVC) curves. These graphs help in visualizing the relationships between price, cost, and profit/loss for different levels of output.