Question

what is normal profit

Answer 1

Normal profit is the difference between total revenue and total cost, which equals to 0. Total cost in this case includes explicit and implicit costs, so it takes into account opportunity cost of alternative use of resources. A firm earns only normal profit (which is the minimal sum, that justifies its functioning) only under conditions of perfect competition in long run, because if total profit is more than 0, it attracts new firms to enter the industry.