Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Firms under Perfect Competition

Question:

The point on the supply curve at which a firm earns only normal profit is called ______.

Options:

Break-even point.

Average Profit.

Long Run Average Cost.

Fixed Cost.

Correct Answer:

Break-even point.

Explanation:

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:

  • The firm earns no economic profit,

  • 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.