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Total revenue minus total cost is equal toGroup of answer choicesprofit.consumer surplus.producer surplus.retained earnings.dividends.

Question

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Solution

Identifying the Key Terms

  1. Total Revenue (TR): The total income from sales of goods or services.
  2. Total Cost (TC): The overall expense incurred in producing goods or services.

Understanding the Relationship

The formula connecting total revenue and total cost is:

Profit=Total RevenueTotal Cost \text{Profit} = \text{Total Revenue} - \text{Total Cost}

Analyzing the Answer Choices

  1. Profit: This is what is derived from subtracting total costs from total revenue.
  2. Consumer Surplus: This refers to the difference between what consumers are willing to pay and what they actually pay.
  3. Producer Surplus: This represents the difference between what producers are willing to accept for a good or service versus what they actually receive.
  4. Retained Earnings: This refers to the portion of net earnings that is retained in the company rather than being paid out to shareholders.
  5. Dividends: These are distributions of profits to shareholders.

Final Answer

The correct choice is profit. Total revenue minus total cost is equal to profit.

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