news of profit

Business profit: Business profit is the differences between business revenues and its expenses. Business profit may be gross or net. Excess of total income over total expenditure is called business profit. Any surplus income that remains after paying remuneration to the suppliers of factors of production like land, labour, and capital is termed profit. Owners of land interest for supply of capital in the business. Business profit is determined by deducting cost from the selling price.

      Selling price – cost = profit.

Economic profit: Economic profit is what remains after both actual expenses and opportunity cost are subtracted from revenue earned. Opportunity cost is the cost of choosing to use resources for one purpose while sacrificing the next best alternative for the use of those resources. The opportunity cost is a measure of everything a person sacrifices to attain an objective. The value of using a resource, measured in terms of the value of the best alternatives for using that resource is called opportunity cost.

• Opportunity cost is the cost of an action in terms of the alternatives foregone.  

-         Providing the finance for explanation.

-         Providing a measuring rod of performance. It is measure of the success of the business.

• Business is an activity that is directed to create values for removing wants of man in society through recurring exchange.
• Profit comes from the efficient production of goods and services demanded by people.

Economic profit = Selling price – Business cost – Opportunity cost.