profit

• What symbol is used to indicate profit in economics?

  $\pi$
• In economics, the explicit costs of production include fixed costs and variable costs.
• Economists consider both implicit and explicit costs when calculating profit, whereas accountants only consider explicit costs.
• What is the opportunity cost of production in economics?

  Implicit cost
• If a company switches from making laptops to tablets, and its accounting profit remains the same, its economic profit is affected by the opportunity cost.
• Order the three companies based on their economic profit, from highest to lowest.

  1️⃣ Company B (£10,000)

  2️⃣ Company A (0)

  3️⃣ Company C (-£10,000)
• What is a zero economic profit called in economics?

  Normal profit
• A positive economic profit is also known as supernormal or abnormal profit.
• What is an economic loss referred to in economics?

  Subnormal profit
• Normal profit is the minimum level of profit required to keep factors of production in their current use.
• What should a company do if its profit falls below normal profit?

  Switch to opportunity cost
• Supernormal profit is any profit made above normal profit.
• When is average revenue (AR) equal to average cost (AC)?

  Normal profit
• Subnormal profit occurs when AR is less than AC.
• What diagram is used in economics to determine profit levels?

  Market structure
• Match the type of profit with its condition:

  Normal profit ↔️ AR = AC

  Supernormal profit ↔️ AR > AC

  Subnormal profit ↔️ AR < AC