Definitions

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House price latest

House prices up by 6.9%.

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Model agencies collude to fix rates

Regulators find leading model agencies guilty of price fixing.

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Normal profits

There are many theories of profit in economics. Economists tend to start with Alfred Marshall’s concept of normal profit, which, he argued, was the residual gain to a firm’s owner as a result of contributing two benefits to the business. The first benefit to the business is the investment of the owner’s personal capital. The second benefit derives from the supply of what Marshall called ‘business power’ - which is the ability to organise business activities. To ensure that an entrepreneur continues to provide these two inputs, a minimum reward will be required – namely, normal profit. Normal profit is, essentially, an opportunity cost - given that the reward must be marginally better than could be derived by supplying these inputs into an alternative endeavour.

Given that normal profit is seen as the necessary reward to enterprise as a factor of production it is possible to think of normal profit as a production cost. If so, then normal profit will be earned if the revenue generated from the sale of a quantity of goods or services (total revenue - TR) equals the cost of producing that quantity (total cost - TC) which covers the opportunity cost of all the factors used. In simple terms, when TC = TR normal profits will be made.

Super-normal profit (SNP) is any reward over and above normal profit.


Alternative finance

Report on the growth of alternative finance.

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GDP latest

UK grows by 0.3% in 1st quarter of 2017.

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Customs unions

Costs and benefits of customs unions.

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New materials

Multiple choice papers for Paper Three.

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Brexit update

Article 50

What trading options are available to the UK?

Savings ratio

Savings ratio falls to lowest level on record.

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Tax avoidance

Double Irish - and a Dutch Sandwich more..

The OECD presents its final package for reform of international tax rules..more

OECD - reducing income inequality will boost growth..more