Question

A normal rate of return on capital investment is time and opportunity cost. What is your interpretation of a "normal" return and what is the moral (ethical) basis for a normal return? Provide a couple of examples for your argument.

Answer 1

A normal return is nothing but the average rate of return or in business terms it is calculated in terms of profit and the main aim is to get the opportunity cost back with less time than the expected returns in the foregone business. This is indeed my intention on a normal return.The ethical issues include the legal and the moral aspects where the returns are intended to be calculated on the basis of profits after paying the taxes and selling your goods in a legalized and systematic manner.

Example- Increasing returns by increasing the prices doesn't account for the ethical aspect.

INcreasing returns by reducing the quality of the product also doesn't come under ethical aspect on the whole.