Paper 2 · 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 (zero economic profit) is earned when total revenue equals total cost, which for a firm means price/average revenue exactly equals average cost: AR = AC. This is the textbook definition of earning only normal profit at that output, regardless of market structure. MC = MR (option A) is the separate profit-maximising condition and holds at any profit level (supernormal, normal, or loss) -- it does not by itself signal that profit is exactly normal.
ZIMSEC Economics Paper 2, June 2009, Q19
