Profit and Loss

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Profit and Loss by Mind Map: Profit and Loss

1. Types of Profit

1.1. Abnormal Profit

1.2. Normal Profit

1.3. Subnormal Profit

2. Functions of Profits

2.1. attracts new businesses

2.2. encourages efficiency

2.3. encourages enterprise

2.4. encourages risk taking

2.5. encourages innovation

3. Profit/revenue = margin

3.1. what can change margin?

3.1.1. cost of capital equiptment

3.1.2. changes in interest payments

3.1.3. labor costs

3.1.4. type of market

4. Loss=when costs exceed revenue

4.1. can be sustained through things

4.1.1. restructuring

4.1.2. shares/loans

4.1.3. cut costs

4.1.4. boost sales

4.1.5. reserves

4.2. causes

4.2.1. temporary downturn in economy

4.2.2. external shocks

4.2.3. changing tastes and technology

5. market

5.1. consumers represent demand

5.2. producers represent supply

5.3. interaction of supply and demand make market

5.4. price acts as signal

5.4.1. rising prices

5.4.1.1. demand > supply

5.4.1.2. shortage

5.4.2. falling prices

5.4.2.1. supply > demand

5.4.2.2. surplus

5.5. factors that influence supply and demand

5.5.1. demand

5.5.1.1. incomes

5.5.1.2. advertising

5.5.1.3. fashion and tastes

5.5.2. supply

5.5.2.1. technology

5.5.2.2. external shocks

5.5.2.3. costs of production

5.6. changes in supply and demand

5.6.1. influence price

5.6.2. surplus

5.6.3. shortage