What is an indifference point?
What is an indifference point? The indifference point is the level of volume at which total costs, and hence profits, are the same under both cost structures. This level or point is known as cost indifference point and at this point total cost of two production methods is same. How do you find the indifference point? Computation of cost indifference point involves equating total cost of two plans or division of differential fixed cost by differential variable cost. It is the point at which total cost lines under two alternatives intersect each other. What do you understand by indifference point...