Economics explained
Category:
Firm's cost structure
Profit
The secret to scoring awesome grades in economics is to have corresponding awesome notes.
A common pitfall for students is to lose themselves in a sea of notes: personal notes, teacher notes, online notes textbooks, etc... This happens when one has too many sources to revise from! Why not solve this problem by having one reliable source of notes? This is where we can help.
What makes TooLazyToStudy notes different?
Our notes:
-
are clear and concise and relevant
-
is set in an engaging template to facilitate memorisation
-
cover all the important topics in the O level, AS level and A level syllabus
-
are editable, feel free to make additions or to rephrase sentences in your own words!
Looking for live explanations of these notes? Enrol now for FREE tuition!
Profit is a very simple concept: it's bringing in more money than you spend.
In order for a business to continue to exist, the total revenue it collects must exceed the total expenses it accumulates at some point in the foreseeable future.
Profit is important because it allows businesses to stay in operation.
Without profit, firms will struggle to survive in the long run.
Profit provides an incentive for entrepreneurs to take risks.
Without generating Profits, a business can't compensate its owners, who may be investing considerable time, money, and energy into the operation. If the owners don't find their investment worthwhile, they'll close the business.
A firm earns profit if its total revenues exceed its total costs of production.
Profit is calculated by using the formula :
Profit = total revenue - total costs
To understand how costs and revenues interact to determine economic profits or losses, economists like to break up a firm’s total costs into two subcategories:
fixed costs
variable costs.