Break-even Analysis


Electric power technologies have electric energy as their single output. If we can describe the cost (in dollars) of producing any quantity Q of output (measured in kWh), and if we know the price that the output can sell for, we can ask the question, “What level of output per year would yield revenues sufficient to cover all the costs of production?” The answer to that question is the break-even output rate for the technology given the prices of all inputs and the selling price of the output. The break-even problem is quite general, applying to many types of technology.

A related question that we will take up in this chapter is the comparison of two devices that produce the same output. This question arises ...

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