BREAK-EVEN VS EQUILIBRIUM

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The Break-even point and equilibrium point are two distinct concepts.

The break-even point is the point where total revenue equals total cost so that the firm is neither earning a profit nor incurring a loss.

The equilibrium point is where demand equals supply so that the market is said to clear. That is, there is no surplus or shortage in the market.

It is the point where a downward-sloping demand curve intersects an upward-sloping supply curve.

Differences Between Break-even Point And Equilibrium Point

1. Break-even point shows the equality of total cost and total revenue whereas equilibrium point shows the equality of demand and supply

2. At the break-even point, there is no profit or loss, whereas, at the equilibrium point, there is no surplus or shortage.

3. The point when the total revenue curve intersects the total cost curve is known as break-even. Equilibrium, on the other hand, is defined as the point at where the downward sloping demand curve intersects the upward slopping intersect.

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