1.3.2

Question 1

: Define revenue, cost, and profit.

Answer 1

Revenue: The total income generated by a business from its normal activities, typically from the sale of goods or services.
Cost: The total expenses incurred by a business in producing and selling its goods or services.
Profit: The financial gain realized when revenue exceeds total costs.

Question 2

What is the formula for calculating profit?

Answer 2

A: Profit = Total Revenue - Total Costs

Question 3

What are the different types of costs?

Answer 3

Costs can be classified in various ways, including:

Fixed Costs: Costs that remain constant regardless of the level of production (e.g., rent, salaries).
Variable Costs: Costs that change with the level of production (e.g., raw materials, direct labor).
Direct Costs: Costs directly associated with producing a product or service (e.g., materials, labor).
Indirect Costs: Costs that support the overall operations of a business but are not directly tied to a specific product (e.g., utilities, administrative expenses).

Question 4

How can a business increase its profit?

Answer 4

A business can increase profit by:

Increasing revenue (e.g., selling more products, raising prices).
Decreasing costs (e.g., finding cheaper suppliers, improving efficiency).
A combination of both.