Question

What does break-even point indicate?

• A. $TR>TC$
• B. $TR<TC$
• C. $TR=TC$
• D. $TC=0$

Answer 1

Answer: (C)

$TR=TC$

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.