Final answer:
Profit in business is the difference between total revenue and total costs, and can be positive, negative, or zero. It is calculated by taking explicit costs from total revenues to find accounting profit, while economic profit also includes implicit costs.
Step-by-step explanation:
Profit in the context of business is defined as the difference between total revenue and total cost, which includes both explicit and implicit costs. An enterprise calculates its accounting profit by subtracting explicit costs from its total revenues. Explicit costs are the actual cash payments made for resources such as labor and materials. In contrast, economic profit accounts for both these explicit costs as well as implicit costs, which are the opportunity costs of resources owned by the firm and used in production.
Based on this definition, profit can indeed be considered to be positive, negative, or 'zero'. Positive profit occurs when revenues exceed total costs, negative profit, or losses, occur when costs are greater than revenues, such as when producing five units with revenues of $125 and costs of $130 results in a loss of $5. A zero-profit situation indicates a break-even point where revenues are equal to the costs. The concept of profit should not be conflated with personal greed, as profit is a fundamental economic signal that indicates the viability of a business and its success in allocating resources efficiently to serve market demands. Furthermore, while profit is essential for the survival and growth of a business, it is not necessarily at odds with good customer service. In fact, delivering superior service can be a long-term strategy for a business to achieve sustainable profitability.