Where is a perfectly competitive firm's break-even output level?
A) at the intersection of the marginal cost curve with the marginal revenue curve
B) at the intersection of the total cost curve with the marginal revenue curve
C) at the minimum point of the average total cost curve
D) at the minimum point of the marginal cost curve
E) at the minimum point of the average variable cost curve

Question

Quizplus · Accepted Answer

A perfectly competitive firm's break-even output level is where the firm produces enough output to cover all of its costs, including the fixed costs. This occurs at the minimum point of the average total cost curve, where the average cost equals the price the firm receives for its output. At this point, the firm is earning zero economic profit, but is covering all of its costs.

Where Is a Perfectly Competitive Firm's Break-Even Output Level