9. Production, Costs & Revenue - Profit

Question 1

How do you calculate profit?

Answer 1

Profit = TR - TC

Question 2

What makes up TC?

Answer 2

Explicit costs - physical costs - TFC & TVCImplicit costs - opportunity costs

Question 3

What does an economist call £0 economic profit?

Answer 3

Normal Profit

Question 4

What does an economist call a positive economic profit?

Answer 4

Supernormal Profits

Question 5

What does an economist call a negative economic profit?

Answer 5

Subnormal Profit

Question 6

What is a definition of normal profit?

Answer 6

The minimum required level of profits to keep factors of production in there current use - covers costs

Question 7

What is a definition of supernormal profit?

Answer 7

Any economic profit above normal profit

Question 8

What is a definition of subnormal profit?

Answer 8

Any economic profit below normal profits

Question 9

At what point on a diagram are normal profits being made?

Answer 9

When AR=AC

Question 10

At what point on a diagram are supernormal profits being made?

Answer 10

When AR>AC

Question 11

At what point on a diagram are subnormal profits being made?

Answer 11

When AR