Question

What is the difference between profit and revenue?

Answer 1

Profit is the net income of the business. It means after all the expenses you paid you, get your profit. On the other hand, revenue just means the total amount of money you earned. It basically means the amount of money you earned before paying your expesnses.

Answer 2

The answer is: Revenue is the total amount producers receive after selling a good. Profit is the total amount producers earn after subtracting the production costs.

To understand this let's take a look the case example.

Let's say you want to open a lemonade stand.

To make 1 glass of lemonade, you need to buy materials consisting of water + lemon + sugar + ice. For these, you need to spend 50 cent.

You sold that lemonade for $ 1 per Glass.

If you sell 10 glasses.

- You need to spend $5  for materials (50 cent x 10). This $ 5 represent the production costs.

- You would obtain $ 10 from the sales ($1 x 10). This $10 represent your revenue.

- Since your revenue is larger than your cost, you would have more money compared to when you start the business.

you would have an increase of: $10 -  $ 5 = $ 5.  This number represent your Profit.