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Profits

9 March, 2015 - 09:40

The profit component of income earned by households equals total revenues of firms less costs as measured by conventional accounting. Profits amounted to 15.6% of GDI, or $2,226.7 billion in 2008, down sharply from five decades earlier, when profits represented about 25% of the income generated in GDI.

Profits are the reward the owners of firms receive for being in business. The opportunity to earn profits is the driving force behind production in a market economy.