Discussion
Break-even analysis assumes the total cost line is
Answer: D
Correct answer: straight over the relevant range of output
Linearity is the central assumption. Total cost is taken as fixed cost plus a constant variable cost per unit, which gives a straight line, and revenue likewise. It holds only over the relevant range - the band of output within which the fixed costs do not step up and the variable cost per unit does not change through bulk discounts, overtime premiums or diminishing returns. Outside that band the analysis does not apply.
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