Normal profit refers to the minimum amount of profit necessary for a firm to stay in business. It is the level of profit that equals total revenue and total cost, including both explicit and implicit costs.
Related terms
Abnormal Profit: This term refers to the profit that exceeds normal profit. It is also known as economic profit.
Implicit Costs: Implicit costs are non-monetary opportunity costs that arise from using resources owned by the firm itself (e.g., foregone rent on company-owned property).
Explicit Costs: Explicit costs are monetary expenses incurred by a firm in its production process (e.g., wages paid to employees or raw material costs).