normal profit vs. economic profit? economic, difference, normal, profit, whats

brk1yn

whats the difference?

chetan86

Normal profit is what you need to earn to cover all the costs, including opportunity cost. It's the profit you get when all your resources are being used efficently and couldn't be put to better use.

Economic profit is any amount beyond normal profit. That is, normal profit => ec profit=0.

rgonzalez

Think of economic profit as total revenue minus total cost; the 'total cost' includes opportunity cost as well (i.e. the value of some alternative forgeone). Accounting profits do NOT consider opportunity costs.