Normal profit
Normal profit is the profit level where Total Revenue equals Total Cost, resulting in zero economic profit. It represents the minimum return needed to keep the firm operating, compensating owners for capital invested and entrepreneurial risk.
Real World
A high-street café owner earning £35,000 profit — exactly what they could earn as a salaried restaurant manager elsewhere — is making normal profit, since there is no incentive to switch careers or close the business.
Exam Focus
Always state that normal profit is included in costs — it is the opportunity cost of entrepreneurship, not an addition to costs.
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