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Profit: Income that can be Positive or Negative
n Profit = 4th form of income in a market economy (after wage, rent and interest)
n Profit = total revenue – total cost n Profit is also termed Net Revenue n Negative Profit = Loss
Profit and Loss (利润和损失)
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Chapter Outline
n Wage, Rent and Interest: Incomes Established in Advance by Contract
n Profit: Income That can be Positive or Negative
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Comparing Economic Profit and Accounting Profit
n Example. Consider Ann, who earns $30,000 as a secretary. Suppose she also owns a building that she rents for $6,000 per year, and she has $23,000 in a certificate of deposit that earns 10% ($2,300) per year. These payments represent contracts that Ann has entered. They represent flows of income which reduce uncertainty in her life.