Final answer:
At the break-even point, a firm's profits are equal to zero as this is the point where the marginal cost curve crosses the average cost curve, indicating no profit nor loss. Option c is the correct answer.
Step-by-step explanation:
At the break-even point, firms are neither making a profit nor incurring a loss. This point occurs where the marginal cost (MC) curve crosses the average cost (AC) curve. If a firm is operating at a market price that is higher than the break-even point, it will generate profits because the price is greater than the average cost.
Alternatively, if the market price is exactly at the break-even point, the firm will earn zero profits. However, if the price is between the break-even point and the shutdown point—where MC crosses average variable cost (AVC)—the firm will incur losses but may continue to operate in the short run as long as it covers its variable costs. If the market price falls below the shutdown point, the firm will immediately shut down since it cannot cover its variable costs.
In light of this information, the correct answer to the question 'At the break-even point, a firm's profits are' is C. equal to zero.