Profit Flashcards
1
Q
Normal profit
A
The minimum profit a firm must make to stay in business, but insufficient in attracting new firms into the market
2
Q
Supernormal profit
A
Profit over normal profit
3
Q
Where does normal profit occur
A
Where AC=AR
4
Q
Role of profit
A
Expansion, R&D, business and worker incentives, Reward for risk taking, source of finance, signal to strength of the economy, efficiency and resource allocation
