ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As we learned, normal profit is when a business takes in enough revenue to cover its expenses. When the business takes in more revenue than it spent in expenses, that is supernormal profit. In the unfortunate case where a business takes in less revenue than it spends in expenses, it’s experienced a loss.

Detailed explanation-2: -Often called abnormal profit, is when a firms total sales revenue exceed the total costs of production i.e. they are earning a profit above and beyond the level of normal profit. This is the level of profit that a firm can enjoy after meeting the main production costs.

Detailed explanation-3: -Super profit is the excess of average profits over normal profits. Under this method, goodwill is calculated on the basis of super profits. Normal rate of return on the capital employed is compared with the actual average profits to find out the super profits.

Detailed explanation-4: -The minimum degree of profit that is required to keep an enterprise in the existing trade is defined as a normal profit. An enterprise that does not make normal profits is not going to continue in business. Normal profits are, therefore, part and parcel of the enterprise’s total costs.