Profit must be sufficient enough for the firm s owners to employ their resources in the venture. The level of accounting profit just sufficient to ensure that all resources used by the firm earn their opportunity cost is called normal profit. As long as economic profit is positive, Joe is better off running his own business. Once economic profit goes negative, Joe would be better off at his old job. Any resource that can be varied in the short run to increase or decrease the level of output.
Examples are labor, materials, etc.
Any resource that can t be varied in the short run. Example is size of the building. Short Run an economic period where at least one resource is fixed. Long Run an economic period where no resource is fixed. When MP is increasing, the firm is experiencing increasing marginal returns.