Yr 2 Profit

Question 1

The equation for profit?

Answer 1

TR - TC

Question 2

Difference between economic profit and accounting profit

Answer 2

Economic profit consider both explicit and implicit costs but accounting profit only considers explicit costs

Question 3

Definition of Normal profit?

Answer 3

The minimum level of profit to keep FOP running in their current use
AR=AC

Question 4

Definition of supernormal profit

Answer 4

Any profit made above normal profit, economic profit is positive
AR > AC

Question 5

Definition of subnormal profit

Answer 5

Any economic profit that is below normal profit, so it’s negative
AR