Economic Profit, Normal Profit and Economic Loss:

(a) Economic Profit

Economic profit is the excess of total revenue over total cost when the latter includes both explicit and implicit costs. It is the type of profit when made by firms in an industry attracts new firms into the industry when no barriers to entry exist while existing firms expand their production. It is also called pure or supernormal profit.

(b) Normal Profit

Normal Profit is when total revenue is exactly equal to total cost when the latter includes both explicit and implicit costs. It is the type of profit when made by firms in an industry does not attract new firms into the industry even when no barriers to entry exist. Existing firms do not leave industry also. The firm's profit then is equal to the implicit costs.

(c) Economic Loss

Economic Loss is the excess of total cost (both implicit and explicit) over total revenue. This type of loss when made by firms in an industry would discourage firms which are unable to cover their variable costs to exit the industry while those who are able to cover their variable costs will stay in the short run.