Question

Profit that a firm earns over and above the normal profit is called the ________.

• A. profit
• B. super-normal profit
• C. explicit profit
• D. none of these

Answer 1

Answer: (B)

super-normal profit

Normal profit is earned when the firm's economic revenue and economic costs are equal. The economic costs consist of explicit and implicit costs incurred (such as opportunity costs). When revenue exceeds economic costs, firms make supernormal profits. Firms in uncompetitive markets may earn super normal profits in the long run.