Profit - Normal Supernormal profit and subnormal profit Flashcards
1
Q
What does economic profit consider when regarding costs ?
A
It considers both implicit and explicit costs
2
Q
What does accounting profit consider when regarding costs ?
A
Only considers explicit costs
3
Q
What is normal profit ?
A
The minimum level of profit required to keep factors of production in their current use .
Occurs when Average revenue = Average cost
4
Q
What is supernormal profit ?
A
The profit made above the normal profit level
Occurs when Average revenue is greater than Average cost
5
Q
What is subnormal profit ?
A
Any economic profit below normal profit
Occurs when Average revenue is less than average cost
6
Q
A
