In
economics 'supernormal profit', also called '
economic rent', 'abnormal profit' or 'pure profit', is a
profit exceeding the
normal profit. Normal profit equals the
opportunity cost of
labour and
capital, while supernormal profit is the amount exceeds the normal return from these input factors in production.
Abnormal profit is usually generated by an
oligopoly or a
monopoly; however, these firms often try to hide this from the market to reduce risk of competition or
antitrust investigation.
In principle there are three kind of supernormal profit:
★
Monopoly rent
★
Resource rent
★
Intra marginal rent
References