The point on the supply curve at which a firm earns only normal profit is called ...........
The point on the supply curve at which a firm earns only normal profit is called ...........
Solution
Option 1: Break-even point -> The point where total revenue equals total cost, earning only normal profit.
Option 2: Average Profit -> This is not a standard economic term for describing the normal profit point.
Option 3: Long Run Average Cost -> This is a cost curve concept, not the specific point of normal profit.
Option 4: Fixed Cost -> Costs that remain constant regardless of output level.
Hence, Break-even point -> The break-even point is where a firm's total revenue exactly equals its total costs (including both explicit and implicit costs). At this point, the firm earns zero economic profit, which means it is earning only normal profit - just enough to keep the entrepreneur in business and cover the opportunity cost of resources. On the supply curve, this represents the minimum price at which a firm is willing to supply goods in the long run. -> correct
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