Profits are the financial gain earned by businesses when their total revenue exceeds total costs. It represents the rewards for entrepreneurship and successful business operations.
Related terms
Losses: The opposite of profits; occurs when total costs exceed total revenue.
Opportunity cost: The value of the next best alternative that must be given up when making a decision.
Accounting profit vs Economic profit: Accounting profit only considers explicit costs (e.g., wages), while economic profit also includes implicit costs (e.g., opportunity cost).