Normal profit
Definition. Normal profit is the minimum level of profit a firm must earn to remain in an industry in the long run, just covering all opportunity costs including the return the entrepreneur could earn elsewhere. It occurs when total revenue equals total cost, where cost includes implicit costs.
Normal profit is treated as a cost of production, so a firm earning only normal profit makes zero economic profit and has no incentive either to leave or to attract new entrants.
This term belongs to Perfect Competition in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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