What is normal profit and what is abnormal profit?

what is normal profit and what is abnormal profit what is the distinction between them can u give me example from both of them.

thank u

Asked by: 1009 days ago - 7 Answers - 11232 views

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Normal profits: The profits which firm expects or the minimum profits which is needed to run the business enterprise.

Abnormal profits: The profits which receive above the expectations is known as abnormal profits

Eg: A firm wants to produce 1000 units but expects the output as 900 units after deducting the normal loss of 10%. But at the same time the output is increased as 950 units then the 50 units are treated as Abnormal profits.

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for example u r a employer  u r working in an organization getting 1000 rupees per month,in first month u get 1000 in second month the organization increases ur salary from 1000 to 2000 so is it normal profit?

or

if u r doing work in an organization and getting salary of 1500 per month,exceed to this salary u have another source of money e.g. ur shop or anything else so can we call the profit which he gets from his shop normal profit or abnormal profit.

can u give me eloberate explanation with simple example plzzzzzzzzzzzzzzz

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Your firm has been earning Rs.5000 since last 5 years, if in the current year your expectations are same then it is the normal profit.

When the income has increased to Rs.6000 i.e; beyond your expectations then Rs.1000 is abnormal profits.

This is according to firm, business. Abnormal profit will not come from our salary.

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thanx very much brother, i hope u continue ur help to us.
by the way what i mean is that in normal and abnormal profit:e.g. u r worker of an organization i r getting 10000 per month from an organization at the same time u r getting 5000 from another resource of e.g. selling some commodity. what do u think about this situation.in this case normal and abnormal profit can take place or no

thank u

• +1

Your welcome my brother.
No brother abnormal profit can’t takes place here.

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If a firm in an industry is making a profit of Rs. 10000 and is expecting to increasing his profit, then it is making a Super normal profit, that is abnormal profit. And if it is consequently, making the same amount of profit every year then it is making a normal profit. The aim of every business is to increase their profits every year and in some cases for e.g in a monopoly it is possibly because of barriers to entry or exit. But, in reality nowadays monopoly does not exit. Thus, firm make the same amount of profit almost every year because of fierce competition in the market.

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