Normal profit

Updated: Aug 20, 2021

The level of profit equal to the opportunity cost of entrepreneurial effort. Normal profit is regarded as the fair reward for the effort the entrepreneur puts into running a firm and the risk that they take on. Levels of profitability higher than this tend to stimulate entry to an industry, and levels of profits lower than normal tend to cause exit.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
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