Supernormal profit
Supernormal profit (also called economic profit or abnormal profit) occurs when Total Revenue exceeds Total Cost by more than the normal profit amount, or equivalently, when Price exceeds Average Total Cost (P > AC).
Real World
Apple consistently earns supernormal profit on the iPhone, with estimated margins above 40%, sustained by brand loyalty, the iOS ecosystem lock-in, and patents that competitors cannot legally replicate.
Exam Focus
On diagrams, shade the supernormal profit area between price and AC multiplied by quantity — examiners award marks for correct labelling.
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