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A typical image from Perversion for Profit: a photograph taken from a lesbian pornography magazine and censored with colored rectangles

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Profit, from Latin meaning "to make progress", is defined in two different ways. Pure economic profit is the increase in wealth that an investor has from making an investment, taking into consideration all costs associated with that investment including the opportunity cost of capital. Accounting profit is the difference between retail sales price and the costs of manufacture. A key difficulty in measuring either definition of profit is in defining costs. Accounting profit may be positive even in competitive equilibrium when pure economic profits are zero.

Accounting profits should include economic profits, which are also called economic rents. For instance, a monopoly can have very high economics profits, and those profits might include a rent on some natural resource that firm owns, where that resource cannot be easily duplicated by other firms.

Usage notes

When the difference is negative the term loss is correct. Negative profit does appear in microeconomics.



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