normal profit


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normal profit

a PROFIT that is just sufficient to ensure that a firm will continue to supply its existing good or service. In the THEORY OF MARKETS, firms’ COST curves thus include normal profit as an integral part of supply costs (see ALLOCATIVE EFFICIENCY).

If the level of profit earned in a particular market is too low to generate a return on capital employed comparable to that obtainable in other equally risky markets, then the firm's resources will be transferred to some other use. See OPPORTUNITY COST, MARKET EXIT, ABOVE-NORMAL PROFIT.

References in periodicals archive ?
Both airlines earn normal profits in Smalltown while consumers get to have their cake and eat it too--they enjoy a stable market and are connected more cheaply than before to an international hub but can also avoid the stop-and-transfer hub when flying to some major destinations.
It is also to say that if the potential for monopoly market positions were totally wiped out by (perfectly) efficient antitrust prosecution, the dynamism of the economy could be undercut simply because investors would then be left with investment opportunities that yield normal profits or less, with their actual average profits earned across an array of investments being less than the much heralded minimum normal profits.
Inasmuch as such intangibles normally are not licensed to unrelated parties, comparables are not available, and it is inadequate to have reference to royalty rates, which often arise in respect of normal profit intangibles.
Assume that when consumers detect a quality change in just one period, firm 2 earns greater than normal profit should it choose not to exit,
The regulator said BSkyB's margin between the wholesale price it charges distributors and the retail price paid by its own subscribers may not be wide enough to allow a normal profit to be made by a third-party distributor.
Profits can be interpreted in different ways depending on the type of profit being analyzed - normal profit, supernormal profit, rents, or windfall profit.
There is the honored tradition in mass merchandising of the "Loss Leader" and the principle is to use something attractive to get people into the store so they may be tempted to buy something else on which there's a normal profit.
Our people made a commitment and focused on the problems we experienced in the second quarter due to higher than normal labor, training and advertising cost and lower than normal profit margins associated with the acquisition of the 43 former Albertson's and Lucky Supermarkets.
The size of the price cut is surprising because the normal profit margin on a car expected by motor dealers is only about three-four per cent.
All too often, dealers make the mistake of making their used guns retail sale price a simple function of the purchase price plus a normal profit margin.
After the second quarter results were adversely affected by higher than normal labor, training and advertising cost and lower than normal profit margins, these areas all returned to levels, which are acceptable, and in our normal operating mode.
Mishcon de Reya said it had discounted the usual fees by 20 per cent, the equivalent to a normal profit margin.