Question

Make a convincing Microeconomics case for "normal profit" to be an endogenous (& subjective) amount.

Answer 1

Normal profit is not a fixed amount. It is determined by the actions of a firm. The greater the efficiency of a firm, the greater the profit. Intramarginal firm which uses better resources will earn economic profits even in longrun whileas marginal firms will make only normal profits. But what is normal profit ultimately depends on the view of a firm. If a firm thinks that it is not making normal profits, it will exit industry and try to enter that field where it can make normal profits determined by it. On the other hand if it makes what it considers normal profits, it will remain in the industry and continue to operate.