When a firm achieves the breakeven point, which of the following is true?

• A. Total revenue is greater than total cost.
• B. The firm is making an economic profit.
• C. Total revenue equals total cost.
• D. Total revenue is less than total cost.

Answer: (C)

Verified step by step guidance

1. Understand the concept of the breakeven point: it is the level of output or sales at which a firm's total revenue equals its total cost, meaning the firm makes zero economic profit.
2. Recall the definitions: Total Revenue (TR) is the total amount of money received from sales, and Total Cost (TC) is the total expense incurred in production, including both fixed and variable costs.
3. At the breakeven point, set up the equality: \(TR = TC\).
4. Recognize that if \(TR > TC\), the firm makes an economic profit, and if \(TR < TC\), the firm incurs an economic loss.
5. Therefore, the breakeven point specifically corresponds to the condition where \(TR = TC\), indicating no profit or loss.