The excess profit made by a firm in a competitive market situation in the short-term is known as

Step 1: Analyze the question The question asks for the term used for the excess profit a firm earns in the short run under perfect competition.

Step 2: Explain the concept

• Normal profit: the minimum profit needed to keep a firm in business. Total revenue equals total cost, which includes the opportunity cost of the entrepreneur. Economic profit is zero.
• Super normal profit (also called abnormal or excess profit): profit above normal profit. It occurs when Average Revenue (AR) is greater than Average Cost (AC) at the equilibrium output.
• Break-even: the point where total revenue equals total cost, so there is neither profit nor loss. This is the same as normal profit.
• Net profit: total revenue minus total costs (a general accounting term). It doesn't specifically mean excess profit.
• Marginal profit: the change in profit from producing one more unit. It isn't a measure of excess profit.

Step 3: Apply it to a competitive market In the short run, a perfectly competitive firm produces where MR = MC. If the market price (AR) is above AC at that output, the firm earns profit above normal. New firms are attracted in the long run, which pushes price down until only normal profit remains. So the excess profit exists only in the short run.

Step 4: Answer The excess profit is super normal profit, which is option E.

Tip: Think of "super" as "above." Super normal means above normal. Remember that in the long run, perfect competition returns to normal profit because new firms enter the market.