Break-even point game
A business economics game for understanding the break-even point. Each round is a firm with its fixed costs (FC), selling price (P) and variable cost per unit (VCu), and a graph with the revenue line and the total cost line. You read where they cross, say whether a given level of sales makes a profit or a loss, work out break-even with Q = FC / (P − VCu), the profit or loss, the minimum price not to lose money, and what happens to break-even when costs or price go up. The numbers always come out exact, as in an exam.
Economics · Secondary, Sixth Form
Seeing the two lines cross explains the formula better than memorising it: left of the crossing, costs beat revenue (loss); to the right, revenue wins (profit). When you answer, both zones are coloured and break-even is marked.
Break-even, the result and the minimum price are typed in, so you have to avoid the exam mistakes: dividing fixed costs by the price and forgetting the variable cost, forgetting fixed costs when working out profit, or thinking a higher price raises break-even. The explanation does the right sum.
What happens if fixed costs, price or variable cost go up is the reasoning question that always comes with the calculation. The game mixes it with the sums so that it is clear why the margin P − VCu decides everything.
"A firm has €6,000 of fixed costs, sells each unit for €25 and it costs €10 to make. Each unit leaves a margin of 25 − 10 = €15, so break-even is 6,000 / 15 = 400 units. If it sells 600, it makes 15 · 600 − 6,000 = €3,000. Anyone who divides 6,000 by the price gets 240, which forgets what each unit costs to make."
Prefer to learn without screens? Try this analogue version:
Imagine a lemonade stand: the table and jug cost €30 (fixed costs) and each cup €0.50 in lemons and sugar.
Choose a price per cup and work out how many cups you must sell to get the €30 back.
On squared paper draw the revenue line and the total cost line, and check that they cross there.
Repeat with another price and compare: how much does break-even fall if you charge 50 cents more?
If you like Break-Even, these activities work similar skills:
Another economics game: news that shifts the curves and the equilibrium price.
Personal finance: inflation, compound interest, debt and scams.
A maths game on percentages, discounts and VAT.
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