Question

When you have the total cost (TC) curve and the total revenue (TR) curve of a company, think about a situation with a single break-even point an another situation with two break-

even points and clearly explain what cause the difference is.

Think about a linear programming model with multiple optimal solutions and clearly explain what cause this to happen? A graph cannot be your explanantion.

Answer 1

Answer:

When we have the total cost (TC) curve and the total revenue (TR) curve of a company, thinking about below situations as

Situation with a single break-even point: This is the situation when the Total Revenue is equal to the Total Cost for the company. This means the total revenue of the organization is equal to the value of total cost value for the organization. Thus at this point there is no profit and no loss and the input cost is balanced out by the revenue value. Thus a first break even point is the situation of the company where the earning is equal to the costing. Total Revenue = Total Cost. From here the revenue will goining to increase and will create the profit for the company.

Situation with with two break-even points: This is the situation in which we find two point / two situations when the Total Revenue becomes equal to the Total Cost for the company. Thus we can say that one point is at the beginning/growing of the sale of the company and similar situation second point will be at the point when sale start declining for the company.

For the first point the initially the total cost was higher and tyeh revenue increased and become equal to the total cost. For the second point the revenue was higher, but due to decline of the sale , the revenue drops and it become equal to the total cost.

Clearly explaining the cause that create difference is that in single point break-even , the revenue generation becomes equal to the cost for the company. and in second break-even point, the revenue starts declining and it becomes equal to the input total cost due to drop/decline in sale. This could be due to the decline phase of the product.

Thinking about a linear programming model with multiple optimal solutions and clearly explaining what cause this to happen is that at these points we can find the maximum revenue for the business. Thus at this points we can find that these points are the points at which total revenue will be maximum for the company. This is the best revenue that can be generated for the function which shows by these points. Thus these points show that total cost is lower than the total revenue at these points for linear programming problem of optimization.