Economic Profit

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An Economic Profit is economic metric from a production process that subtracts economic expenses from economic revenue.



References

2015

  1. Economic Profit (Or Loss) Definition | Investopedia
  2. Carbaugh, 2006. p.84.
  3. Adam Smith Profit "In general, the classical economists made no serious attempts to explain the nature and source of profits until the 1820s, when they responded to socialist criticism of profit. Smith apparently accepted without question the legitimacy of profits as a payment to the capitalist for performing a socially useful function, namely, to provide labor with the necessities of life and with materials and machinery with which to work during the time-consuming production process."

2014

  • http://www.investopedia.com/terms/p/profit.asp
    • A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners, who may or may not decide to spend it on the business. Calculated as: Economic Profit = Total Revenue - Total Expenses.

      Profit is the money a business makes after accounting for all the expenses. Regardless of whether the business is a couple of kids running a lemonade stand or a publicly traded multinational company, consistently earning profit is every company's goal. The path toward profitability can be long. For example, online bookseller Amazon.com was founded in 1994 and did not produce its first annual profit until 2003. Many start ups and new businesses fail when the owners run out of capital to sustain the business.