Clearly understanding of simple economic principles are not the forte of the average mumsnetter. I think your explanation is a good one I’ll add another.
Here’s a basic Primer for the clueless who have embarrassingly shown their ignorance Source:
Finding profit is simple using this formula:
Total Revenue - Total Expenses = Profit.
Here is an example:
Francis wants to find out how much money they’ve made in their dog walking business. They need to know their total revenue and total expenses to calculate their profit.
Total revenue: $10,000
Total expenses: $1,500
Francis’ total expenses are calculated by adding their direct and indirect costs, as follows:
Direct costs, such as dog treats: $1,000
Indirect costs, like posters and flyers: $500
Total expenses: $1,000 of direct costs + $500 indirect costs = $1,500
By subtracting $1,500 of total expenses from their total revenue of $10,000, Francis can calculate that their profit is equal to $8,500.