Question

In a competitive firm when AR=AC, then firm earns ___________.

• A. no profit
• B. abnormal profit
• C. normal profit
• D. heavy loss

Answer 1

The correct option is C normal profit

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.