What defines profit in a business context?

Profit in a business context is defined as the difference between a firm’s revenues and its costs. This definition captures the essence of what profit actually is: it reflects the amount of money a business retains after all its expenses have been subtracted from its total income.

When a business generates revenue from its operations, it incurs various costs such as production expenses, labor, materials, and overhead. By deducting these costs from the revenue, the resultant value is the profit, which indicates the financial health of the business. Essentially, profit is a key performance indicator that shows how effectively a company is managing its resources to generate income.

The other choices do not accurately define profit. Total sales generated by a business refers specifically to the gross revenue and does not account for expenses, which is necessary to determine profit. The expenses incurred in producing goods focus solely on costs and do not consider revenues, thus failing to capture the profitability aspect. Finally, the income produced from investments pertains to returns from investments, which is distinct from a business's operational profit derived from its core activities.