Profit – normal, supernormal (abnormal) and subnormal

Question 1

Explicit costs of production

Answer 1

TFC, TVC

Question 2

Implicit costs of production

Answer 2

opportunity cost

Question 3

Economic profit considers both

Answer 3

implicit and explicit costs

Question 4

Accounting profit considers

Answer 4

explicit costs

Question 5

0 profit =

Answer 5

normal profit

Question 6

> 0 profit =

Answer 6

supernormal (abnormal) profit

Question 7

<0 profit =

Answer 7

subnormal profit

Question 8

Subnormal if

Answer 8

the opportunity good of production would have made more profit than the good that was produced

Question 9

Supernormal if

Answer 9

this good A that was produced would have had more revenue than the next best alternative

Question 10

Normal profit =

Answer 10

profit required to keep factors of production in the same use - AR = AC

Question 11

Supernormal profit =

Answer 11

any profit made above the normal profit - AR> AC

Question 12

Subnormal profit =

Answer 12

any profit made below the normal point - AR< AC

Question 13

Stay open if

Answer 13

Covering variable costs

Question 14

shut down points

Answer 14

Short run - when price is below AVC

Long run - when price is below AC