The point on the supply curve at which a firm earns only normal profit is called ______.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Break-even point.
The break-even point is the point on the supply curve (or cost-revenue graph) where a firm’s total revenue equals its total cost, meaning:
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The firm earns no economic profit,
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But it does earn normal profit (the minimum required to keep resources in the current use).
At this point, the firm is covering all of its explicit and implicit costs, and neither gains nor loses money.