Profit equals the total amount of money made minus expenses. prices. revenue. supply

profit equals the total amount of money made minus expenses. prices. revenue. supply.

LectureNotes said profit equals the total amount of money made minus expenses, prices, revenue, and supply.

Answer:

It appears there may be some confusion or error in the statement provided by LectureNotes. Let’s clarify the concept of profit in economic terms.

1. Understanding Profit:

Profit is a financial metric calculated as the difference between the total revenue generated by a business and the total costs incurred in generating that revenue. Mathematically, it’s expressed as:

\text{Profit} = \text{Total Revenue} - \text{Total Expenses}

Key Components:

  1. Total Revenue:

    • Total revenue is the amount of money made from sales or services before any expenses are deducted. It’s often also referred to simply as “sales” or “income.”
    • Formula:
      \text{Total Revenue} = \text{Price per unit} \times \text{Quantity sold}
  2. Total Expenses:

    • Total expenses include all the costs associated with producing and selling goods or services. This encompasses a wide range of costs such as manufacturing costs, labor, rent, utilities, and more.
    • Expenses can be divided into fixed costs (which do not change with the level of production, like rent) and variable costs (which change with the level of production, like raw materials).

Clarifying the Terms Mentioned in the Statement:

Let’s dissect and clarify the terms mentioned:

  • Prices:

    • Price is the amount of money charged for a product or service. It’s what the customer pays for one unit of the product. Prices alone do not determine profit but are part of the revenue formula.
  • Revenue:

    • Revenue is the total money made from sales or services before expenses are subtracted. It’s a crucial component in the profit equation but not something that gets subtracted to determine profit.
  • Supply:

    • Supply refers to the quantity of a product that producers are willing and able to sell at different prices. While supply affects production and potentially revenue, it is not directly subtracted to calculate profit.

Therefore, the correct statement following the economic definition of profit should be:

Profit equals the total revenue minus total expenses.

Putting It All Together:

To clear any misunderstanding from the initial statement, remember:

  • Profit = Total Revenue - Total Expenses

This formula is fundamental in understanding business profitability. For a business to be profitable, its revenue must exceed its expenses.


Final Answer:

Profit is calculated as the total revenue minus the total expenses incurred in generating that revenue. The accurate formula is:

\text{Profit} = \text{Total Revenue} - \text{Total Expenses}