Chapter 10.1, Problem 3R

To determine

To state: Difference between profit and revenue.

Answer to Problem 3R

Revenue is the total income whereas the profit is the net income earned after subtracting all the expenses.

Explanation of Solution

Revenue is the total income earned by a company through sale of goods and services.

Profit is the net income earned by the company after subtracting all the expenses and other costs from the revenue.

As revenue and profit both are firm's earning but sometimes it is possible to generate revenue but a company is going through losses. It happens when the expenses are more than the revenue, so the company incurs loss.

Economics Concept Introduction

Introduction: For a business, profit and revenue, both are important. Revenue is the income from sale of product and services. When we subtract expenses from revenue, profit is derived.