Short-term economic profits refer to positive financial gains made by a firm within a specific period of time. These profits occur when total revenue exceeds total costs in the short run.
Related terms
Fixed Costs: Fixed costs are expenses that do not change with changes in production levels (e.g., rent). They need to be paid regardless of whether there are short-term economic profits or losses.
Variable Costs: Variable costs change with changes in production levels (e.g., raw materials). They directly impact short-term economic profit calculations.
Marginal Revenue: Marginal revenue refers to the additional revenue gained from selling one more unit of output. It plays a role in determining short-term economic profits.