Tag: profit

Profit generally is the making of gain in business activity for the benefit of the owners of the business. The word comes from Latin meaning “to make progress,” is defined in two different ways, one for economics and one for accounting.
Pure economic profit is the increase in wealth that an investor has from making an investment, taking into consideration all costs associated with that investment including the opportunity cost of capital. Accounting profit is the difference between price and the costs of bringing to market whatever it is that is accounted as an enterprise (whether by harvest, extraction, manufacture, or purchase) in terms of the component costs of delivered goods and/or services and any operating or other expenses. A key difficulty in measuring either definition of profit is in defining costs. Pure economic monetary profits can be zero or negative even in competitive equilibrium when accounted monetized costs exceed monetized price.
In economics, a firm is said to be…