Profit
Definition
Profit refers to the financial gain made by a business after deducting all expenses from its total revenue. It represents the reward for taking risks and successfully running a business.
Analogy
Imagine profit as your allowance after subtracting all your expenses (like buying snacks and toys) from your total earnings (such as doing chores). It's what you get to keep as a reward for managing your resources effectively.
Related terms
Revenue: The total income generated by selling goods or services before deducting any expenses.
Fixed Costs: Expenses that do not change regardless of how much output a business produces.
Marginal Cost: The additional cost incurred when producing one more unit of output.
"Profit" appears in:
Subjects (1)
Study guides (2)
Practice Questions (4)
- What happens to the profit at the point where quantity = MR=MC?
- What is the effect on profit if a firm produces at a quantity where MR < MC?
- When a firm is earning a profit in the short run, what is the likely response from other firms in the industry?
- Which of the following is true about profit in the long run of perfect competition?
Resources
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