Profit Flashcards
symbol for profit in econ
pi
Profit =
TR-TC
Total costs are made up of
implicit
explicit costs
what are explicit costs
physical costs
TFC
TVC
what is implicit cost
OC
What is the difference between accounting and economic profit
econ profit considers both impicit and expplicit costs
accounting doesnt
What is Normal Profit
min lvl of profit needed to reward entrp for taking a risk and therefore to stay in particular line of bs
What is the value for normal profit
0 ( anything above)
if normal profit below 0 i,e subnormal what does htis mean
why are you in x bs go do something else instead or go back to job casue its clearly not worth it
What is the condition on a graoh for normal profit
AR = AC
What is SuperNormal/Abnormal Profit /Excess Profit
any profit over and above normal profit
(econ profit which is +Ve)
what is the condition on grpah for SNP
AR > AC
What is Subnormal Profit
any econ pprofit below NP
What does Subnormal Profit mean
economic loss so not enough profit’s being made to cover OC of production
What does Subnormal Profit look like on graph
AC>AR
