3.3.4 - Normal profits, supernormal profits and losses

• Profit = revenue - costs
• Maximum supernormal profit is made where the difference between total revenue and total costs is the greater
• Normal profit is the profit firm could make by using its resource in their next use. Normal profits must be earned if factors of production are kept in present use. Also when the firm break-even

  TR = TC
• Abnormal profit is profit above normal profit

  abnormal is where TR > TC or AR > AC