Final answer:
The break-even point is where gross income matches all fixed and variable expenditures, resulting in zero economic profits.
Step-by-step explanation:
The point at which gross income equals total fixed and variable expenditures is known as the break-even point. This is the level of output where the marginal cost (MC) curve intersects the average cost (AC) curve at its minimum point. At this break-even point, a firm is making zero economic profits because the price at which it sells its product equals its average costs. When market price is higher than this point, the firm earns profits, and when it's lower but still above the shutdown point, the firm incurs losses yet operates in the short run. Below the shutdown point, the firm will cease operations as it no longer covers its variable costs.