In the graph, the break-even point of the firm is A firm's short-run cost curves. AVC is lowest at ₹6 (point S, 3 units); AC is lowest at ₹15 (point B, 4 units); the rising MC curve passes through S and B. A price line is drawn at ₹24.

In the graph, the break-even point of the…

In the graph, the break-even point of the firm is

Question 13

MediumOriginal question

In the graph, the break-even point of the firm is

A firm's short-run cost curves. AVC is lowest at ₹6 (point S, 3 units); AC is lowest at ₹15 (point B, 4 units); the rising MC curve passes through S and B. A price line is drawn at ₹24.

S, the lowest point of AVC, at a price of ₹6Correct answerYour answerwhere price is ₹24Correct answerYour answerwhere MC is lowestCorrect answerYour answerB, the lowest point of AC, at a price of ₹15Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

At B, price = minimum AC = ₹15, so TR = TC: the firm earns only normal profit.
Above ₹15 it earns supernormal profit; below it, a loss.

Concept: Break-even point
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsProfit maximisation and the firm's supply

Practise this chapter →

Ten questions from Perfect Competition & Supply, at your own pace.

Practise this chapter →

Ten questions from Perfect Competition & Supply, at your own pace.

In the graph, the break-even point of the firm is

Question 13

Explanation