Final answer:
A cost of doing business is an expense and it is necessary to earn revenue, which is the correct answer to the question (D. expense; revenue). Expenses represent the total cost of production, and revenue is derived from the sale of goods and services.
Step-by-step explanation:
A cost of doing business is referred to as a expense, and it is necessary to earn revenue. Therefore, the correct answer would be D. expense; revenue. An expense is what the firm pays for producing and selling its products, involving the cost of converting inputs to outputs. The sum of all these costs is the total cost. Revenue is generated by a firm when households pay for goods and services, which is a result of the demand for the firm's products, represented by Price x Quantity.
Each business tries to earn a profit, which is the difference between total revenue and total cost (Profit = Total Revenue - Total Cost). The profit serves as the reward for entrepreneurs who take the risk of starting a business.
Understanding this relationship between expenses, revenue, and profits is crucial for identifying the health of a business and making informed decisions in the marketplace.