What is a primary characteristic of profit?

Profit is fundamentally defined as the difference between total revenue and total costs. A primary characteristic of profit is that it increases when costs decrease, assuming that revenue remains constant. This relationship highlights the importance of cost management in a business's profitability. When a company effectively reduces its expenses while maintaining sales levels, the increased difference between their revenues and reduced costs results in higher profit margins.

Understanding this characteristic emphasizes the interconnected nature of revenue, costs, and overall profitability. It also illustrates why businesses often focus on strategies to reduce costs, such as improving operational efficiency or renegotiating supplier contracts, to enhance their profit generation.

The other options present misconceptions about profit. Profit is not a fixed amount; it fluctuates based on costs and revenues. While active management is certainly beneficial for sustaining and optimizing profit, it is not a defining characteristic of profit itself. Additionally, profit is not solely dependent on market price; it is influenced by a combination of factors, including production costs and operational efficiencies.