Normal profit

Normal profits
Definition: The minimum the amount a firm must receive to carry on production
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normal profits the amount of accounting profits when economic profits are equal to zero. (9)
normative economics economic analysis that makes recommendations about economic policy. (1) ...

Normal profit - The opportunity cost of capital and risk taking just necessary to keep the owners in the industry. Normal profits are usually included in what economists (but not businesspersons) call total costs.

NORMAL PROFIT: The opportunity cost of using entrepreneurial abilities in the production of a good, or the profit that could have been received in another business venture.

Then it had the normal profit-taking sell-off (with declining volume) that follows such moves. It fell back to support at 45 (which held and then drove the stock upward again). That is when I bought. The bounce off of support was my trigger signal.

Economic theorists generally make a distinction between two types of profit: normal profit, in which the entrepreneur receives the minimal necessary amount to encourage him to open or stay in a particular business; and excess profit, ...

RESALE PRICE METHOD Method used in transfer pricing between affiliated companies, under which an arm's length price is ascertained by deducting a normal profit margin from the resale price at which a buyer of inventory assets resells these assets to ...

For example, the manufacturing cost of a car (i.e., the costs of buying inputs, land tax rates for the car plant, overhead costs of running the plant and labour costs) reflects the private cost for the manufacturer (in some ways, normal profit can ...

Economists distinguish between normal profit and excess profit. Normal profit is the opportunity cost of the ENTREPRENEUR, the amount of profit just sufficient to keep the firm in business.

In the LCM for inventory, the floor is the net realizable value (NRV) minus the normal profit.

It is a way to maximise sales, whilst maintaining normal profits. It is sometimes known as sales maximisation. It will be used by firms who are seeking to increase market share and who don't seek to maximise profits.

For Microsoft or Sony though, it's highly likely their production cost + normal profit margin would not come out anywhere near these early prices
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Thus, for reputation mechanisms to work, firms must receive some profits at the margin, and workers must receive wages in excess of their opportunity costs. The presence and importance of these higher-than-normal profits and wages, ...

Term used when discussing INVENTORIES. Inventory cannot be valued lower than the "floor" which is the net realizable value of the inventory less an allowance for a normal profit margin.

Normal profit - The minimum payment an entrepreneur expects to receive to induce the entrepreneur to perform entrepreneurial functions.

In applying the rule, however, market cannot exceed the ceiling (net realizable value = selling price less costs to complete and dispose) nor can market be less than the floor (net realizable value less normal profit margin).

Additionally, the rules stipulate that "market" should not be less than a floor amount, which is the net realizable value less a normal profit margin. What arises then, is the following decision process: ...

See also: Perfect competition, Feedback, Tip, Opportunity cost, National income