Question

Break-even point is achieved when :

• A. National Income = Consumption
• B. Consumption = Saving
• C. Consumption = Investment
• D. National Income>Consumption

Hint:

Break-even income occurs where saving is zero. At this level: Income = Consumption.

Answer 1

The Correct Option is A

Step 1: Understanding break-even point.
Break-even point refers to the level of income at which total income equals total expenditure. At this point there is neither profit nor loss in the economy.
Step 2: Relation between income and consumption.
In macroeconomic analysis, the break-even level of income occurs when all the income earned by households is spent on consumption and there is no saving.
Step 3: Analysis of the options.

• (A) National Income = Consumption: Correct. When all income is consumed, saving becomes zero and the break-even point is achieved.
• (B) Consumption = Saving: Incorrect. Saving is generally a portion of income left after consumption.
• (C) Consumption = Investment: Incorrect. This is not the definition of break-even income.
• (D) National Income>Consumption: Incorrect because saving exists in this situation.

Step 4: Conclusion.
Thus, break-even point is achieved when national income equals consumption. Final Answer: National Income = Consumption.