How is normal profit would be an example of Total Fixed Cost ?
I’m not certain what your question means.
Written on Schweser : Examples of TFC is PPE , Normal Profit , Fixed Interest Costs on Debt Financing , etc –
It seems a bit odd.
I skimmed my 2014 SchweserNotes and didn’t see these examples. Where did you find them (study session, reading)?
Study Session 4 , Reading 15 LOS 15.d
per 15.a - “In the short run, the normal profit for a firm may be considered fixed. In the long run, it will vary w/ the required RoR on equity investments. However, because accounting profit is often highly variable in both the long and short run, economic profit is highly variable in both long and short run”
normal profit is the implicit opportunity costs of the conomic profit equation, and in my mind at least these opportunity costs generally don’t vary much over the short term, but definitely over the long term. Does seem like a wierd thought process, but besides knowing this rule I’m not personally going to study it much for the exam… hope this helps!
Thanks for the answer