ECONOMICS (CBSE/UGC NET)

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ECONOMICS

PROFIT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
A firm is making supernormal profit when its total revenue is greater than its total costs. This means the revenue generated from using the factors of production in this way is greater than could have been generated by using them in any other way. If firms in an industry are making supernormal profit, this will create an incentive for other firms to try to enter that industry.
A
Yes, I understand this from the notes
B
No, I don’t understand this from the notes
C
No, I don’t understand this, as I have not read the notes
D
None of the above
Explanation: 

Detailed explanation-1: -If a firm makes more than normal profit it is called super-normal profit. Supernormal profit is also called economic profit, and abnormal profit, and is earned when total revenue is greater than the total costs.

Detailed explanation-2: -Economics. When a firm’s total revenue is greater than its total economic costs, the firm is earning an economic profit.

Detailed explanation-3: -Gross profit is a company’s profits earned after subtracting the costs of producing and selling its products-called the cost of goods sold (COGS).

Detailed explanation-4: -Supernormal profit is a situation where the seller can earn profits above the normal profits. Hence, a monopoly firm can earn a supernormal profit in the long run as well as a short run because the seller has control over the prices to be fixed of the product and the entry new firm is also restricted.

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