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 ?
Cost increases may require higher prices; the eventual necessity of reaching a normal profit level may also require some price increases.
Just because Chittenden's normal profit margin has been reduced by this introductory offer does not mean that other divisions should also be expected share in the reduced profits.
Economic profits must be a prospect, or else producers of portfolios of products could not hope to offset their expected losses on some products and earn a normal profit over all the products in their portfolios.
They're squeezing $20 million a day out of the California market in excess profit because of how much more they're making over their normal profit.
The manager said it was a great success and that they made four times the normal profit.
Like many suppliers, Masterlooms' suggested retail price is double the wholesale price, and retailers can take off 30 to 35 percent and still make a normal profit, Rahmanan said.
A landscape contractor that is short of work and needs a job may be prepared to reduce its normal profit.
Some researchers see these two payment methods as the twin parts of a mechanism to insure that franchisees receive no more than a normal profit on their investment in a franchise.
I am doing research on what I can expect for normal profit margins, so I can prepare a realistic business plan.
There's going to be four or five more months of soft markets, then we should retain normal profit accessibility.
If a firm is earning more than normal profit in a competitive industry, other firms will expand their operations in the industry in order to garner a share of this profit.
When fully ramped up at normal profit margins by 2001, the contract should contribute around $0.