mmm... so i have this microeconomics essay task about monopolistic competiton... and it seems that i read many things about "in the long run, you can only gain normal profit"
like... i don't get it. normal profit is 0 profit right? break even? why would any company want that? and how is 0 profit even possible? how did many companies surviving for a very long time then? if in the "theory", you can't get anything more.
x Turn on thread page Beta
economics... about normal profit watch
- Thread Starter
- 04-11-2015 12:04
- 09-11-2015 16:11
There are 4 factors of production - land, labour, capital, enterprise.
A firm making normal profit makes enough to pay for all of these, including the profit under enterprise. So yes,whilst in the long run you can only make normal profits, this includes a profit for the entrepreneurs who take on the risk.
Supernormal profit is anything above and beyond this.
- 09-11-2015 22:19
Think of it this way
normal profit > rent, food, transport, basic life
supernormal profit > snow, escorts, sport cars, ice on the wrist