Final answer:
The break-even market share is the portion of total market sales a company needs to achieve to cover its costs without making a profit or loss. It is calculated by dividing the company's break-even volume by the total market demand.
Step-by-step explanation:
The break-even market share for a company is C) break-even volume divided by market demand. Determining the break-even market share is crucial for a company to understand the proportion of the market it needs to capture in order to cover its costs. It is a measurement of the percentage of total market sales volume that the firm must achieve to reach its break-even point, where it is neither making a profit nor loss.
As per Figure 8.7, if a firm’s market price is higher than the break-even point, the firm is making a profit. If the market price is exactly at the break-even point, there are zero profits. However, if it falls below but still above the shutdown point, the firm can operate at a loss. Below the shutdown point, a firm would cease operations as it is not covering its variable costs.