Profit simply means a positive gain generated from business operations or investment after subtracting all expenses or costs. In economic terms profit is defined as a reward received by an entrepreneur by combining all the factors of production to serve the need of individuals in the economy faced with uncertainties.

Why do profits arise?

Profits arise as a result of uncertainty of future. ADVERTISEMENTS: Entrepreneurs have to undertake the work of production under conditions of uncertainty. In advance they have to make estimates of the future conditions regarding demand for the product and other factors which affect price and costs.

What does it mean to make profits?

A profit is money you make, as opposed to money you lose. … Businesses need to make a profit — money — or they’ll have to fire employees, cut expenses, and maybe go out of business entirely. If more money is coming in than going out, that’s a profit. Profit also means a benefit.