Read the two statements and choose the correct option.
I. At the break-even point, total revenue equals total cost.
II. At the break-even point, the firm earns zero normal profit.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

I is true: P = AC means TR = TC.
II is false: normal profit is counted as part of cost, so at break-even the firm earns normal profit, not zero.

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

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

Read the two statements and choose the correct option.I. At the break-even point, total revenue equals total cost.II. At the break-even point, the firm earns zero normal profit.