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 ?
(1) "Normal rate of return" and "normal profit" are used interchangeably in these texts and represent the same concept.
Brickworks' normal profit for the year ended 31 July 2010 was A$110.2 million.
"Under such conditions, the Dutch banking system will be challenged to return to comparatively normal profit levels.
The airline industry's recent slew of surcharges are a method by which airlines assure their survival by generating a normal profit.
Historical cost $100,000 Current replacement cost 70,000 Net realizable value 90,000 Net realizable value less a normal profit margin 85,000 Fair value 95,000 Under IFRS, what amount should the company report as inventory on its balance sheet?
If they make their repayments, the lenders earn a normal profit. If the borrower proves unable to repay their loans, the lender will take their homes off them, charging the borrower huge sums by way of default fees.
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.
The manager said it was a great success and that they made four times the normal profit.
No financial details were disclosed but the contract was said to be low-risk and to have "normal profit margins".
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. If a landscape contractor has ample work, it may want a reasonably high profit to take on the job.