If capital employed decreases and average profit remains same what will happen to super profit?

Correct answer: Super profit may increase

Super profit means the amount by which average profit is greater than normal profit. Normal profit is calculated on capital employed at the normal rate of return. Thus, when capital employed falls and the rate remains unchanged, normal profit also falls, while average profit is given as unchanged. The gap between average profit and normal profit can therefore become larger. This is why the suitable answer is that super profit may increase.

The word “may” is important because the exact change depends on the normal rate and the amounts involved. It will not automatically become zero or necessarily decrease. For example, if average profit is ₹50,000 and normal profit falls from ₹30,000 to ₹20,000, super profit rises from ₹20,000 to ₹30,000. Hence option A follows from the formula: Super Profit = Average Profit − Normal Profit.