What is a profit in economics?

In economics, profit is the difference between revenue that an economic entity has received from its outputs and total costs of its inputs, also known as surplus value. It is equal to total revenue minus total cost, including both explicit and implicit costs.

What is the difference between accounting profit and economic profit?

Accounting profit is the total revenues minus explicit costs, including depreciation. Economic profit is total revenues minus total costs—explicit plus implicit costs. Explicit costs are out-of-pocket costs for a firm—for example, payments for wages and salaries, rent, or materials.

What is the difference between revenue and economic profit?

Revenue is income from selling a firm’s product; defined as price times quantity sold. Accounting profit is the total revenues minus explicit costs, including depreciation. Economic profit is total revenues minus total costs—explicit plus implicit costs.