Abnormal profit

From Wikipedia, the free encyclopedia

In economics supernormal profit, also called economic rent, abnormal profit or pure profit or excess profits, is a profit exceeding the normal profit. Normal profit equals the opportunity cost of labour and capital, while supernormal profit is the amount exceeds the normal return from these input factors in production.

Abnormal profit is usually generated by an oligopoly or a monopoly; however, these firms often try to hide this from the market to reduce risk of competition or antitrust investigation.

In principle there are three kind of supernormal profit:

• Monopoly rent
• Resource rent
• Intramarginal rent

[edit] See also

• War profiteering
• Windfall profits
• Excess profits tax

[edit] References

This article does not cite any references or sources. (April 2007) Please help improve this article by adding citations to reliable sources. Unverifiable material may be challenged and removed.