State with reasons whether you agree or disagree with the following statements. 5) Savings are negative before break-even point.

State with reasons whether you agree or disagree with the following statements.

5) Savings are negative before break-even point.

Answer: The above statement is correct. Break Even point is achieved where consumption exactly equals income and correspondingly, savings are zero. Below this point consumption exceeds income. In such a situation consumption is financed by drawing from past savings, that is the savings are negative.

No comments: