Final answer:
The break-even point is where total revenue equals total fixed and variable costs, signifying a situation where the business neither profits nor loses money.
Step-by-step explanation:
The correct description of the break-even point is B. Where total revenue equals total fixed and variable costs. At the break-even point, a firm covers all its costs, and its profit is zero. This point is crucial for businesses to understand as it represents the level of sales at which the company neither makes a profit nor suffers a loss. According to the concept of LibreTexts, when analyzing a perfectly competitive firm, total revenue for the firm is represented by a straight line that increases with the level of output, with the slope of this line being equal to the price of the good. However, the total cost curve has some curvature and begins to slope upward more steeply at higher levels of output due to diminishing marginal returns.
The maximum profit is achieved not at the break-even point but rather at the level of output where total revenue exceeds total cost by the greatest amount. Moreover, in a long-run equilibrium, firms in a perfectly competitive market will produce at an output level where the price is equal to marginal revenue, marginal cost, and average cost (P = MR = MC and P = AC), resulting in zero economic profits.