What Does Business Profit In Economics Means

We will discuss Business Profit In Economics.Business profit is defined as the difference between the total income from selling and marketing a product , minus the costs, it is assumed that in order to obtain benefits we must face a series of costs related to the production and distribution characteristic of said activity.

The way companies have to facilitate their profit, will be through the income statement (or profit and loss account), which will reach the final result, through a breakdown of income from which expenses derived from the activities are subtracted economic.

Business Profit In Economics Is Related To Economic Activity

Therefore, the Business Profit will be calculated by subtracting from the total income the total costs incurred by the company to develop its economic activity , let us suppose an example, in the year 2017, a company obtains a total income of one million euros, and the total cost has been 500,000 euros, if we calculate the difference we will obtain 500,000 euros of Profit obtained from the production of merchandise, but now, we would have to take into account other types of costs that we need to produce these products, such as labor, energy, facilities, loan interest, etc.

When we contribute something to society;Business Profit In Economics

Even if we do not obtain a monetary gain and even have losses, the corporate image  can improve. For example, participating in events for the integration into the labor market of the disabled. How many people will come to buy our products because they feel identified with our social project?

In the latter case, two types of benefit are present. The social benefit (what we contribute to society) and the economic benefit (the clients that support society generates).

In conclusion, it is a very broad and generic concept. The general idea is simple and is included in the definition. From there we can extrapolate it, as we have seen, to various areas. Areas that, according to their nature, will allow it to be quantified, cannot be quantified or are difficult to quantify.

by Abdullah Sam
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