normal profit

Show Summary Details

Quick Reference

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.

Subjects: Economics.

Reference entries

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.