Overview
Normal profit is a crucial concept in economics, representing the minimum profit required for a business to remain viable. It ensures that all costs are covered, allowing firms to continue operating without incurring losses. Understanding normal profit helps businesses make informed decisions about ...
Key Terms
Example: If a company covers all its costs, it earns normal profit.
Example: A business earning $10,000 after costs may have an economic profit.
Example: At equilibrium, the price of a product stabilizes.
Example: Choosing to invest in stocks instead of bonds has an opportunity cost.
Example: High demand with low supply increases prices.
Example: The smartphone market is highly competitive.
Related Topics
Key Concepts
Normal ProfitMarket EquilibriumOpportunity CostEconomic Profit