Normal Profit

… a core term used in Economic Analysis and Atlas102

Definition

The Economist (reference below) defines normal profit as the opportunity cost of the entrepreneur, the amount of profit just sufficient to keep the firm in business, and adds:

“If profit is any lower than that, then enterprise would be better off engaged in some alternative economic activity. Excess profit, also known as super-normal profit, is profit above normal profit and is usually evidence that the firm enjoys some market power that allows it to be more profitable than it would be in a market with perfect competition.”

Atlas topic, subject, and course

Producer Theory and Competition (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Sources

The Economist, Profit, Economics A-Z, at http://www.economist.com/economics-a-to-z/p#node-21529475, accessed 7 May 2016.

Page created by: Ian Clark, last modified 7 May 2016.