Economics 1 Marks Question

Sub-normal profits or losses occur when: TR < TC or AR  <  AC.

Profits are said to be extra-normal or abnormal when: TR > TC or AR > AC.

Profits are said to be normal when: TR=TC or AR = AC.

Net profits are the difference between total revenue and total cost.
Net Profits =TR-TC

Gross profits are the difference between total revenue and total variable cost.
Gross ProfitsTR-TVC

Accounting profits are defined as the difference between total revenue and explicit costs.
Accounting Profits - TR - Explicit costs

Economic profits are defined as the difference between total revenue and total cost (explicit + implicit).
Economic Profits =TR-TC (Explicit cost + Implicit cost)

Producer's equilibrium refers to a situation where profits are maximised, ie, the difference between total revenue and total cost is maximised or losses are minimised.

A producer is an economic agent who produces goods and services with the aim of maximising his profit.