A set of key definitions centred around the concept of profit

Abnormal profit

Profit in excess of normal profit - also known as supernormal profit or monopoly profit. Abnormal profits may be maintained in a monopolistic market in the long run because of barriers to entry

Break-even output

The break-even price is when price = average total cost (P=AC)


A cross subsidy uses profits from one line of business to finance losses in another line of business e.g. Royal Mail and 2nd class letters

Marginal profit

The increase in profit when one more unit is sold or the difference between MR and MC. If MR = £20 and MC = £14 then marginal profit = £6

Monopoly profit

A firm is said to reap monopoly profits when a lack of viable market competition allows it to set its prices above the equilibrium price for a good or service without losing profits to competitors

Normal profit

Normal profit is the transfer earnings of the entrepreneur i.e. the minimum reward necessary to keep her in her present industry. The activities of the entrepreneur are independent of the level of output. Normal profit is therefore a fixed cost, included in the average, not the marginal, cost curve


The excess of revenue over expenses; or a positive return on an investment.

Profit margin

The ratio of profit over revenue, expressed as a percentage. Mainly an indication of the ability of a company to control costs

Profit maximisation

Profit maximization occurs when marginal cost = marginal revenue

Profit per unit

Profit per unit (or the profit margin) = AR – ATC. In markets where demand is price inelastic, a business may be able to raise price well above average cost earning a higher profit margin on each unit sold. In more competitive markets, profit margins will be lower because demand is price elastic

Sub-normal profit

Any profit less than normal profit – where price < average cost

Supernormal profit

A firm earns supernormal profit when its profit is above that required to keep its resources in their present use in the long run i.e. when price > average cost

CPD courses

Economics Teachers National Conference 2015

Our popular Economics Teacher National Conference takes place on Monday 22 June 2015 at the superb Wellcome Collection Auditorium on Euston Road in Central London. This is the leading enrichment CPD event for Economics teachers in the UK and always attracts a good number of teaching colleagues from further afield too!Confirmed speaker line-up:Duncan Weldon - BBC Newsnight Economics Correspondent (Economic Policy after the Election)Sir Paul Collier, Oxford University - Where next for Development Economics?Adrian Woolridge (The Economist) - The Great DisruptionDavid Smith (Economics Editor of the Sunday Times) Prospects for the UK EconomyOur delegate prices are:Single Delegate - £175 per personDepartment Deal - £125 per person (for two or more colleagues attending from the same school or college)PGCE / NQT - £75 per person

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Teaching & learning products

The UK Economy in 2015 Revision Guide

This new full colour 28 page revision guide by tutor2u's Geoff Riley provides all AS & A2 Economics students with a data and chart-rich summary of the key issues facing the UK Economy in 2015.


AQA AS Economics Worked Answers (2014)

Exemplar A Grade answers to the AQA ECON1 and ECON2 exam papers in summer 2014