Question

At break-even point, a firm makes:

• A. normal profits
• B. super-normal profits
• C. extra-normal losses
• D. none of the above

Answer 1

The correct option is A normal profits

At break-even point, a firm makes normal profits. At this point, total revenue and total cost are equal.Profits are said to be normal when TR=TC or AR=AC. Normal profits are defined as the minimum return that the producer expects from his capital invested in the business. Normal profits are a part of total cost.