Why do economists treat a normal rate of return on invested capital as an element of fixed costs rather than as a profit?

Why do economists treat a normal rate of return on invested capital as an element of fixed costs rather than as a profit?

 

 

Answer:

Normal return on capital is considered as a rental rate of capital, and since amount of capital invested is usually treated as a fixed cost (in short run), return on invested capital is also treated as a fixed element, included in normal profit. However, this is not included in economic (excess) profit

Asked on February 15, 2018 in economics.
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