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Economics vocabulary · Markets, Supply and Demand

Profit

Meaning in economics, with examples

/ˈprɒfɪt/nounCore term

In economics, profit means: The money a business has left after paying all its costs; if costs are higher than revenue, the result is a loss.

In Turkish: kar, kazanç

How it is used

In economics, firms are usually assumed to maximise profit. Companies make, earn or report a profit; profits rise, fall or are squeezed. Economists also use economic profit, which subtracts opportunity cost as well, so it is lower than the accounting profit in company reports.

Example sentences

  1. The company made a profit for the first time in three years.

  2. Rising energy costs have squeezed profits across the manufacturing sector.

Common collocations

  • make a profit
  • profit margin
  • maximise profit
  • pre-tax profit
  • profits fell
  • marginal costThe extra cost of producing one more unit of a good or service; a key idea when a firm decides how much to produce.
  • competitionRivalry between firms that sell similar products and try to win the same customers, which tends to push prices down and quality up.
  • monopolyA market in which a single firm is the only seller of a product with no close substitutes, which gives it the power to set prices.
  • perfect competitionA theoretical market with many small sellers of an identical product, free entry and exit, and full information, so that no single firm can set the price.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Markets, Supply and Demand

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This page explains English vocabulary for learners. It is not financial advice.