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# Ordinary Profits of Stock

## Definition

The normal rate of return that capital can expect to earn in a particular
trade or industry under competitive market conditions, serving as a benchmark
for evaluating investment opportunities.

## Source Chapter

Book IV, Chapter 5

## Context

Smith uses ordinary profits as a standard for determining whether bounties
are necessary, arguing that trades earning ordinary profits don't require
subsidies, while those earning below this rate may indicate fundamental
unprofitability.

## Economic Domain

Distribution

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