What is the best definition of profit

Subject : Business

Question: What is the best definition of profit?

A. Profit is the possible income from producing an additional item.

B. Profit is the price of producing one additional unit of a good.

C. Profit is the additional income gained from selling an additional good.

D. Profit is the financial gain from business activity minus expenses.

Expert Verified Solution:

The correct answer is:

D. Profit is the financial gain from business activity minus expenses.

Explanation:

Profit is defined as the difference between total revenue (income from business activities) and total expenses (costs associated with producing goods or services). It represents the financial gain a business makes after covering all its costs.

In contrast:

A. Profit is the possible income from producing an additional item: This describes marginal revenue, not profit.

B. Profit is the price of producing one additional unit of a good: This refers to marginal cost, not profit.

C. Profit is the additional income gained from selling an additional good: This describes marginal revenue or contribution margin, not overall profit.