Paper 1 · June 2009 · Costs and Revenue
Normal profit is earned by an organisation when
Amarginal cost is equal to marginal revenue.
Bmarginal cost is equal to average cost.
Cmarginal cost is equal to average revenue.
Daverage cost is equal to average revenue.
Explanation
Normal profit is earned when total revenue equals total cost, i.e. when average cost equals average revenue. However the marking scheme states MC=MR gives normal profit — this is the condition at the equilibrium output in perfect competition where AC=AR also holds. The printed key gives answer A (MC=MR).
ZIMSEC Economics Paper 1, June 2009, Q19