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Profit is what is gained, after costs are accounted for. In accounting, this is usually measured in monetary terms. In economics, profit is most often measured differently, since costs are opportunity costs.Profit is income received by buying low and selling high. Includes the case in which an entrepreneur buys factors of production and uses them to make something that can be sold for more than the costs of obtaining future inputs. To Karl Marx, in between buying low and selling there must be a production process in which workers produced surplus-value (unpaid labor), the basis for profits.
Profit can be considered as payment for being willing and able to provide funds for net investment (like interest) or for being willing and able to take risks.
In neo-classical economics, there are a number of different kinds of profit:
- Normal profit
- AbnormalAbnormal profit also referred to as supernormal profit is an economic term of profit exceeding the normal profit. Normal profit equals the opportunity cost of labour and capital, while abnormal profit exceeds the normal return from these input factors in or supernormal or monopolyAlternate use: Monopoly (game In economics, a monopoly (from the Greek monos one + polein to sell) is defined as a market situation where there is only one provider of a product or service. Monopolies are characterized by a lack of economic competition fo profit
Profitability refers to the amount of profit received relative to the amount invested, often measured by a rate of profitIn economics, the profit rate refers to the relative profitability of an investment project or of an capitalist enterprise or for the capitalist economy as a whole. It is similar to the idea of the rate of return on investment. In Marxian political econom or rate of return on investmentIn economics the rate of return on investment refers to the benefits to an investor (the profit) relative to the cost of the initial investment. It is similar to the rate of profit as a measure of profitability. The simplest way to measure the rate of ret.
A profit however may not indicate a success, or a loss failure. After all many pyrrhic victoriesA Pyrrhic victory is a victory which is only achieved with heavy losses, often to the point of offsetting potential benefit to such that the overall situation becomes worse for the Pyrrhic victor than it was before battle commenced. Usually the phrase ref could be worse than a simple loss which can be learnt from.
Economics
Accounting
