a) Profit

a) condition for profit maximisation

b) normal profit, supernormal profit, and losses

to maximise profits → level of output where MR = MC

explicit cost = monetary payments for resources

implicit cost (opportunity cost) = potential loss of profit after certain decisions

MP = MR - MC

TP = TR - TC

  • TC including explicit and implicit costs

a loss is made when

  • TR < TC

normal profit is produced when

  • TR = TC

supernormal profit is produced when

  • TR > TC