Super profit is __________.

the average profit earned by the firm

No worries! We‘ve got your back. Try BYJU‘S free classes today!

the normal profit

No worries! We‘ve got your back. Try BYJU‘S free classes today!

the difference between average profit and normal profit

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

all of the above

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is D the difference between average profit and normal profit
Super profit means, excess profit that can be earned by a firm over and above
the normal profit usually earned by similar firms under similar circumstances. In other words it is the excess of average profit over normal profit.
Super profit is calculated as follows:
Super profit = Average profit - Normal profit

Suggest Corrections

Similar questions

The capital employed of a business is 1,20,000. The normal rate of return is 10%. A firm is able to earn an average profit of 15,000. Calculate Super Profits.

Q. The goodwill of a firm is valued at

R s . 1, 35, 000

3

years purchase of super profit. Determine the missing values:
Average Profit

= \frac{3, 60, 000}{3} = R s . 1, 20, 000

Normal Profit

= R s . . . . \times \frac{15}{100} = R s . . . .

Super Profit

=

Average Profit

-

Normal Profit

= R s . 1, 20, 000 - R s . . . . = R s . . .

Goodwill

=

Super Profit

\times

No. of years Purchase.

Q. A monopoly firm can earn super normal profit in the __________.

Q. profit = Average profit - Normal profit

Q. A business has earned average profit of ₹ 4,00,000 during the last few years and the normal rate of return in similar business is 10%. Find value of goodwill by:
(i) Capitalisation of Super Profit Method, and
(ii) Super Profit Method if the goodwill is valued at 3 years' purchase of super profits.
Assets of the business were ₹ 40,00,000 and its external liabilities ₹ 7,20,000.

Join BYJU'S Learning Program