Question

Which of the following statements are correct when a firm produces at an output level where Total Revenue equals Total Cost:

Profit is maximized.

All of these are true.

Profit is zero.

Supply equals Demand.

Total Revenue id maximized.

Answer 1

When Total Revenue is equals to Total Cost, the firm is not making any profit means Profit is Zero.

In the given situation of Total cost equal to Total revenue the situation is called Break Even Point(BEP) this situation tells that the firm is neither making any profit now incurring any losses. Total cost of producing the current quantity of a product is equal to the revenue earned by selling the same quantity of the product.

Profit is maximized at the point where the positive difference between Total revenue and Total cost is maximum. TR is greater than TC.

Demand and supply generally has no direct connection with the Cost and And as such it does not have a bearing on Profit.

Since only one option is correct as it is clear from above explanation, the option All correct is not possible.