Step 1: Understanding the Concept:
In economic theory, profit is viewed differently than in accounting. Normal profit is the minimum level of profit required to keep the entrepreneur in their current business. It is essentially an opportunity cost.
In economics, Total Cost (\(TC\)) includes both explicit costs (actual payments for resources) and implicit costs (the value of the owner's own resources used in the business).
Normal profit occurs when the firm covers all its costs, including the implicit salary of the owner and interest on the owner's capital.
Step 2: Detailed Explanation:
Let us evaluate each statement provided in the question:
Statement (A): When total revenue equals total cost.
In economics, \(TC = \text{Explicit Costs} + \text{Implicit Costs}\).
If Total Revenue (\(TR\)) is exactly equal to this Total Cost, the firm is earning just enough to stay in business. This is the state of normal profit.
Hence, statement (A) is correct.
Statement (B): When economic profit is zero.
Economic profit is defined as \(TR - \text{Economic Costs}\).
Since Economic Costs include implicit costs (normal profit), an economic profit of zero implies that normal profit has been achieved.
Hence, statement (B) is correct.
Statement (C): When price is equal to minimum AVC.
The point where Price (\(P\)) equals the minimum of Average Variable Cost (\(AVC\)) is known as the Shut-down Point.
At this level, the firm is only covering its variable costs and is losing all its fixed costs. This is a state of loss, not normal profit.
Hence, statement (C) is incorrect.
Statement (D): When price is equal to ATC in the long run.
In a perfectly competitive market, firms enter or exit the industry until economic profits are driven to zero.
In the long run, equilibrium occurs where \(P = MC = ATC\).
When \(P = ATC\), the firm's average revenue equals its average cost, meaning total revenue equals total cost. This results in normal profit.
Hence, statement (D) is correct.
Step 3: Final Answer
Since statements (A), (B), and (D) are theoretically sound definitions or conditions for normal profit, the correct option is (A).