What are supernormal profits?

A firm operating in any market structure has one requirement to stay in business - breaking even. In economic terms, this is known as normal profits, wherein a firms costs and revenues are equal. Supernormal profits are made by firms when its total revenues exceeds its total costs, i.e. it makes enough money to stay afloat, with some money left over. These profits can then be put to whatever purpose the owners of the firm choose - from reinvestment or to pay out dividends to shareholders. Supernormal profits can be made in all market structures, but whether they can be maintained depends on the difficulty to break into the market, also known as its barriers to entry. In perfect competition, supernormal profits will be wiped out by new entrants seeking to take advantage of the profitability of the market. Other structures, such as monopoly (one dominant firm) and oligopoly (a few dominant firms), are far more difficult to break into, and therefore supernormal profits can be maintained with ease in these market structures.