What is the positive difference between total revenue and total costs at a given level of output?

What is the positive difference between total revenue and total costs at a given level of output?

• A. Revenue
• B. Profit
• C. Cash flow
• D. Return on investment

Answer: (B)

Profit is the amount a business earns after covering all its costs at a specific level of output. It’s calculated as total revenue minus total costs. Revenue is the money brought in from selling goods or services, while costs include both fixed costs (that don’t change with output) and variable costs (that do). The profit figure shows the net benefit to the firm from producing and selling that level of output. Cash flow, by contrast, looks at the timing of actual cash receipts and payments, so it can be positive even when accounting profit isn’t, or vice versa. Return on investment compares profit to the capital invested, rather than representing the simple difference between revenue and costs.

Profit is the amount a business earns after covering all its costs at a specific level of output. It’s calculated as total revenue minus total costs. Revenue is the money brought in from selling goods or services, while costs include both fixed costs (that don’t change with output) and variable costs (that do). The profit figure shows the net benefit to the firm from producing and selling that level of output.

Cash flow, by contrast, looks at the timing of actual cash receipts and payments, so it can be positive even when accounting profit isn’t, or vice versa. Return on investment compares profit to the capital invested, rather than representing the simple difference between revenue and costs.