A firm reaches a break-even point (normal profit position) where:

A) marginal revenue cuts the horizontal axis.
B) marginal cost intersects the average variable cost curve.
C) total revenue equals total variable cost.
D) total revenue and total cost are equal.

Question

Cameron Thompson · Accepted Answer

Final Answer : D, Explanation :  At the break-even point, a firm neither makes a profit nor suffers a loss, which means that its total revenue equals its total cost. Therefore, the correct option is D. Option A is incorrect because marginal revenue cutting the horizontal axis represents the point of maximum revenue, not break-even point. Option B is incorrect because the intersection of marginal cost and the average variable cost curve represents the minimum point of the average total cost curve, not the break-even point. Option C is also incorrect because the point where total revenue equals total variable cost represents the level of output at which a firm covers its variable costs only, not break-even.

A firm reaches a break-even point (normal profit position) where:

A) marginal revenue cuts the horizontal axis.
B) marginal cost intersects the average variable cost curve.
C) total revenue equals total variable cost.
D) total revenue and total cost are equal.

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Learning Objectives

Learning Objectives

Related questions

A firm reaches a break-even point (normal profit position) where:A) marginal revenue cuts the horizontal axis.B) marginal cost intersects the average variable cost curve.C) total revenue equals total variable cost.D) total revenue and total cost are equal.

Definitions

Learning Objectives

Learning Objectives

Related questions

A firm reaches a break-even point (normal profit position) where:

A) marginal revenue cuts the horizontal axis.
B) marginal cost intersects the average variable cost curve.
C) total revenue equals total variable cost.
D) total revenue and total cost are equal.