Distinguish between normal profit &super normal profit
Answers
part -1The distinction between normal profit and super normal profits play an important role in economic theory. Normal profit is the reward of entrepreneurial effort. Normal profits are define as the minimum income that an entrepreneur must earn in order, to induce him to remain in the current business or industry, if the entrepreneur does not get this basic minimum he will not production.
This profit is a fixed amount which is included in the cost of production. Normal profit gets distributed over the large volume of output. Normal profit is thus an incentive to produce output.
This profit arises due to the function of the entrepreneur at this profit no existing firms leave the industry nor any new enter the business. The firm or the producer neither expands nor contracts business at this normal profit. Normal profit accrues to a firm in the long period. This long period profit is more for less stable and almost remains constant Normal profit can be expressed in terms of transfer costs. The entrepreneur has certain factors and services of his own which he utilizes in his business. These factors like capital, land and managerially service would have earned him certain amount of remuneration if they had been utilized in other's business.
Answer:
in an adiabatic process no exchange of energy between system and surrounding takes place.
