Symbolically, P=R-C (where P denotes profits, R denotes revenue and C denotes Cost). Profit can be defined as the difference between revenue earned from selling a product and the cost of producing that product. Economic profit is different from the general business term ‘profit’. In economic terms profit is defined as a reward received by an entrepreneur by combining all the factors of production to serve the need of … However, economists also assume that firms may aim to maximize revenue (profit is revenue – cost), maximize market share or achieve a pre-defined level of profit. These costs include labor, materials, interest on debt, and taxes. Profit is a widely monitored financial metric that is regularly used to evaluate the health of a company. In a trade transaction, profit is the difference between the price at which you sell a good and the price at which you bought it. Profit is the revenue remaining after all costs are paid. Profit is usually used when describing business activity. The term profit has distinct meaning for different people, such as businessmen, accountants, policymakers, workers and economists. The general assumption is that firms are producing goods to maximize profits . In economics, the excess of revenue over costs is called “pure profit” or “economic profit”. Profit simply means a positive gain generated from business operations or investment after subtracting all expenses or costs.

Concept of Profit Maximization.

Profits are the difference between revenues and costs. Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity. But “cost” is a complex concept, and “revenue” too is not all that simple, so the economic analysis of “profit” ends up … The basic concept of “profit” is simple: profit equals revenue minus costs. Firms often publish various versions of profit in their financial statements.